housing
“Sad negative record”: Germany is issuing fewer and fewer building permits
Housing construction in Germany is stalling – due to high construction costs and sharply increased building interest rates
© Rolf Vennenbernd / DPA
Building Minister Klara Geywitz (SPD) has promised 400,000 newly built apartments per year – and is far from achieving this goal. Now the construction industry is warning that there could not even be 250,000 apartments by 2024.
According to the statistics office, in the first nine months of the year the number of building permits fell by 28.3 percent to 195,100 apartments. The reason for this development is the high construction costs and the sharp rise in building interest rates.
There were significant declines in the nine months for all types of buildings except dormitories. The decline was greatest in two-family homes, where the number of permits more than halved. Permits for single-family homes fell by more than a third compared to the previous year.
Lowest number of building permits since 2013
The number of 19,300 residential building permits in September was the lowest since 2013, as highlighted by the Main Association of the German Construction Industry. “Neither the housing summit nor the hesitant political initiatives have been able to initiate a turnaround and bring new confidence into the market,” explained Managing Director Tim-Oliver Müller.
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He once again called for a nationwide reduction in property transfer tax by the federal states as well as the standardization of state building regulations, which has been many years overdue. The construction industry is expecting an interest rate reduction program from the federal government “as quickly as possible”: only if investors succeed in reducing the refinancing costs can the housing construction engine be expected to start.
Interest rate reductions for affordable housing
The Federal Association of German Housing and Real Estate Companies (GdW) also called for interest rate reductions – interest rate developments are “exactly the lever” that the government must use “with a manageable use of resources”. President Axel Gedaschko specifically called for interest rates to be reduced to 1.0 percent “for affordable housing.” Rents between nine and twelve euros per square meter will then be possible again.
The Central Association of the German Construction Industry warned: “If things continue like this, not even 250,000 apartments will be completed in 2024.” This is “a fiasco with an announcement”. Chief Executive Felix Pakleppa demanded that the government put housing construction “at the top” of the agenda.
The traffic light government started with the goal of building 400,000 new apartments per year, 100,000 of which would be social housing. Construction Minister Klara Geywitz (SPD) has now admitted that this goal cannot be achieved. 295,300 new apartments were completed in 2022.