Fewer and fewer new apartments are being built in Germany.
(Photo: dpa)
Wiesbaden Shortly before the federal government’s housing summit, the Federal Statistical Office published further bad news for the construction industry on Monday. The number of permits for the construction of new apartments fell by 31.5 percent or 9,600 in July compared to the same month last year.
In total, permission was granted for 21,000 new apartments. “Increasing construction costs and increasingly poor financing conditions are likely to continue to contribute to the decline in construction projects,” said the statisticians, explaining the negative trend.
The construction industry is looking bleak. “The free fall in residential building permits continues unabated,” said the managing director of the Main Association of the German Construction Industry, Tom-Oliver Müller. “The tenth consecutive month with a double-digit decline in approvals is a sad record.”
In the first seven months of the year, 156,200 apartments were approved. This corresponds to a decrease of 60,300 or 27.8 percent to 156,200 compared to the same period last year. The federal government has actually set itself the goal of 400,000 apartments annually in order to meet the growing demand, especially in large cities. However, according to experts, they are likely to miss this mark by a wide margin.
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The housing construction summit next week in the Chancellery is expected to provide new impetus. If the federal government “does not resolutely turn things around, the housing shortage in Germany will be cemented,” warned Müller. The construction and real estate industry is calling for a reduction in real estate transfer tax, less bureaucracy and the discounted release of public land for the rental housing market.
KfW funding still has no clear effect
Since March 2023, housing subsidies for climate-friendly new buildings have been available from the Kreditanstalt für Wiederaufbau (KfW). “There is still no clear effect of these measures on the number of approvals,” said the statistics office. The number of building permits fell even more sharply from March to July than from January to July 2023 overall.
There was a 36.5 percent decline in approvals for single-family homes to 30,800 in the first seven months. For two-family houses, there was even a decrease of 53.2 percent to 8,900. The number of permits also fell significantly for the type of building with the most apartments, multi-family houses, by 27.5 percent to 83,600. There was only an increase in residential homes.
The German construction and real estate industry fears a worsening crisis after the European Central Bank (ECB) raised interest rates again last week. “The increase in interest rates will further fuel the recession in construction as financing costs rise and construction becomes more expensive,” Müller recently told Reuters. In the fight against inflation, the ECB has raised interest rates to the highest level since the start of the monetary union. The key interest rate rose from 4.25 to 4.50 percent.
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