Housing construction in Germany did not pick up in 2023, despite the high demand, especially in metropolitan areas. 294,400 apartments were completed last year. That was 900 or 0.3 percent fewer units than in 2022, according to the Federal Statistical Office. However, the result was better than previously expected. A decline to 215,000 to 270,000 apartments had been feared. But the number of completions has hardly changed since 2021. The federal government’s original target of 400,000 new apartments per year was once again clearly missed.
Construction projects have become significantly more expensive in the past two years due to the sharp rise in loan interest rates and construction costs. As a result, many projects have been postponed or canceled, particularly in housing construction. The industry is complaining about a lack of new orders and cancellations of projects that have already been planned. The Main Association of the German Construction Industry explained that many of the completions of the previous year can still be attributed to permits that were applied for and granted under significantly better conditions in the years up to 2022. “The bottom line, however, remains: In the previous year, fewer apartments were built than the need for affordable living space actually required,” said Managing Director Tim-Oliver Müller.
For the current year, the construction industry association assumes that only 220,000 to 230,000 apartments will be completed. In view of the housing shortage, especially in metropolitan areas, associations in the construction and real estate industry are calling for more state funding. The leading association of the real estate industry, ZIA, estimates the gap in new construction in Germany at 600,000 apartments and warned that this figure could rise to as many as 830,000 apartments in 2027 without corrections.
Building permits have also been declining for months. The authorities gave the green light for the construction of just under 260,000 apartments in 2023 – the lowest level since 2012. In the first quarter of 2024, the number of building permits collapsed by 22.2 percent to 53,500 apartments. The Association of the Housing Industry GdW spoke of an “alarming collapse”.
“The lean years are clearly still ahead of us”
“The really hard times are yet to come,” said President Dirk Salewski of the Federal Association of Independent Real Estate and Housing Companies (BFW) recently. “Anyone who now acts as if we have passed through the valley of tears is in reality just resting on their laurels from the day before yesterday.” Every second company complains about a lack of orders. “No planning is being done now, which means that no construction will take place in the coming years,” stressed Salewski. “The lean years are clearly still ahead of us.”
The industry repeatedly appeals to the public sector to speed up and simplify construction. Municipalities must allocate more building areas, planning and approval times are too long and environmental protection requirements are excessive. In addition, according to the lobby, there is a lack of digitalization and staff in the building authorities.
In the Federal Republic of Germany, an average of 400,000 new apartments have been completed per year since construction statistics began in 1950. Housing construction reached its highest level to date in 1973 with around 714,200 units completed in the former federal territory. After reunification, 1995 was the record year with 602,800 new apartments in Germany as a whole. The fewest apartments were completed during the global financial market crisis in 2009 (159,000).