Berlin Days later, Tim-Oliver Müller is angry. The general manager of the German construction industry (HDB) criticizes the behavior of the Federal Minister of Construction and sees his industry as a “scapegoat”: It may be part of the political game to point the finger at others when things are not going so well for a political department. But while builders, the construction industry, planners, the real estate industry and even the tenants’ association agree, the ministry “does not recognize the situation”.
The reason for the excitement: Wednesday February 8th. The Bundestag debates the crisis on the housing market. Federal Building Minister Klara Geywitz, actually a valued interlocutor in the industry, explains her point of view this afternoon. “The Office for Technology Assessment at the German Bundestag certifies that the construction industry has a relatively low level of productivity development and low innovation activity,” announced the SPD politician to the members of parliament.
And further: “It says there: The way in which buildings are erected has essentially remained the same in recent decades. Masonry and concrete are still the main building materials. And: The machine technology used on construction sites has hardly changed fundamentally in the last ten to 15 years. I ask you: Can you think of another industry where it is the case that production technology has not changed in the last 15 years? No!”
It is only a brief moment in which the minister gambles away a lot of understanding. The same goes for HDB general manager Müller: “Of course we’re happy to take on the challenge of building better, more efficiently and in a more climate-friendly manner,” he says to the Handelsblatt. “That is our claim as an industry.” However, no other industry in Germany is regulated and restricted as massively in its planning and production process as construction. Therefore, accusing the industry of a lack of productivity as the sole cause is “a joke”.
Geywitz” Criticism triggers shaking of heads not only in the construction industry. Unease about the minister is also spreading in the housing and real estate industry, even if superficially friendly words are exchanged. Last Tuesday, Andreas Mattner, President of the Central Association of the Real Estate Industry (ZIA), presented her with the spring report of the real estate experts, praised the minister for “always having an open ear” and added: “But she can’t do magic either.”
The mood changes
Many in the construction and real estate industry give Geywitz credit for the fact that she doesn’t duck away, but is always ready to talk. But the mood changes. Investments in the housing industry are less attractive than they have been for many years, said Mattner on Tuesday. Drastic increases in construction prices and interest rates in recent months have often caused project calculations to “crumple down”. The ZIA President warns: “The hut is on fire.”
The hint is clear. Among other things, Mattner expects the minister to advocate for deregulation, as well as for a rapid start to new construction funding with a total volume of ten billion euros a year. In contrast, only 1.1 billion euros are planned. Of this, 350 million should be available for the promotion of climate-friendly family homes. 750 million euros are intended for all other applicants, such as housing groups or cooperatives.
Canceled Projects
Axel Gedaschko, President of the Central Association of the Housing Industry GdW, also criticized Geywitz’ refusal to provide more money for new buildings: “Government funding should always be the last resort, but in the current crisis situation with exploding costs on all sides there is no way around it.” The task the government is “to counteract the undesirable development of less and less affordable and social housing with a long-term funding concept”.
The assumption in the construction and housing industry: Geywitz knew that she could not expect more money from Finance Minister Christian Lindner (FDP). That’s why she’s been saying for weeks: “A lot of money doesn’t help much.” Her reasoning: Even in 2021, when interest rates were low, there was federal funding worth billions and no war in Ukraine, fewer than 300,000 apartments were completed.
“I agree with the Federal Building Minister Klara Geywitz that funding alone will not solve the problems,” says construction industry lobbyist Müller. “But it is necessary in order to achieve affordable rents.”
In view of the high immigration figures and declining construction investments, Geywitz will miss its goal of 400,000 new apartments a year in the foreseeable future. The reasons range from increases in construction costs and interest rates, to slashed subsidies and long approval times, to escalating building regulations. “The situation is bitter for the construction companies who want and can build – but have not received any orders. A slap in the face for an industry that has been asked for years to create new capacities in order to achieve political goals,” says Müller.
The Professional Association of Insolvency Administrators (VID) speaks of a “strong damper” for the construction industry. “Not only private builders, but also commercial and public clients are putting construction projects on hold or canceling projects,” explains VID chairman Christoph Niering. “This will have a significant impact on many construction companies and craft businesses.”
Nationwide construction cost moratorium
The federal states are also impatient – even if they do not see the blame solely on Minister Geywitz. “The federal government is in demand overall: housing needs security and reliability,” said Ina Scharrenbach, CDU building minister in North Rhine-Westphalia, the Handelsblatt. “Just saying that housing construction is important is not enough.” Essential for Scharrenbach: reliable new construction subsidies.
From March 1st, new funding conditions for state funds from the KfW Bank will apply. However, there is no long-term clarity for the construction industry. The traffic light coalition is currently negotiating a fundamental reform of the Building Energy Act and the associated support systems.
“The previously anchored efficiency house standards are only based on energy efficiency and miss the actual goal: the reduction of CO2 emissions in buildings,” says a position paper that has just been published by the FDP. In the future, the focus should be on emissions instead of energy efficiency.
Scharrenbach also calls for all new planned regulations to be subjected to a cost and reality check in the future. “The requirements that the federal government places on home builders are incredibly high,” says Scharrenbach. A nationwide moratorium on construction costs is therefore urgently needed. This means that there should be no regulations that drive up construction costs.
More: Real estate experts expect up to 700,000 missing apartments