Frankfurt, Berlin Real estate prices in Germany have only known one direction for a long time: upwards. The tense housing market is now having tangible consequences in everyday life for more and more Germans. According to a study presented by the Kiel scientists of the Working Group for Contemporary Building (Arge) on Thursday at the Housing Day in Berlin, 8.5 million people live in apartments that are overcrowded.
The new federal government must “now clear the way for climate-friendly construction and modernization that is affordable for everyone,” demands Axel Gedaschko, President of the umbrella association of the housing industry GdW. The traffic light government wants to create 400,000 new apartments every year, around 100,000 of them social housing alone. But the expert alliance believes that the path to more affordable housing can only be achieved through a bundle of measures. What do the experts suggest? The most important points are as follows:
The home ownership rate in Germany is traditionally very low, it is currently around 45 percent, and it has been stagnating since 2010. This also has to do with the fact that many average earners have difficulty raising the seed capital to buy a house.
In order to boost new construction, the government wants to set new tax incentives for builders. In the future, three instead of two percent of the costs of a new building should be allowed to be written off each year. In addition, non-profit housing is to be reintroduced, which means further tax advantages and investment commitments. Landlords would receive tax bonuses and subsidies if they offer permanently cheap apartments.
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However, the alliance demands that households with little equity should also have easier tax access to real estate. Tax incentive systems would have to be created for landlords who are oriented towards the common good and who offer apartments below certain market rents on a permanent basis.
2. Relaunch funding for energy-efficient construction
At the end of January, the federal government abruptly stopped the previous funding for energy-efficient houses from KfW, triggering a lot of resentment in the industry and among those affected. Several housing industry associations called on their member companies this week to have claims for damages legally examined. The authors of the consortium study are now demanding that “the KfW funding programs must be consistently converted to technology-neutral CO2 savings”. Further tightening of the energy efficiency of new residential buildings, on the other hand, “doesn’t make sense”.
>> Read here: Federal government threatens wave of lawsuits after KfW funding freeze
The decarbonisation of the heat supply is considered to be a more effective lever than expanding the requirements for the building envelope. GdW President Gedaschko emphasizes that ever higher standards for buildings overwhelm both builders and tenants financially and do not bring the desired climate effect. Renewable energies, tenant electricity, municipal heating planning as well as fleet and district solutions must be brought forward.
According to the experts, in order to make climate protection affordable for tenants as well, eight to 14 billion euros in subsidies are needed annually for the socially responsible transformation of rented apartments. They put the annual costs for the energy-saving renovations recommended by the study at up to 150 billion euros per year – i.e. 3.6 trillion euros by 2045.
3. Conversion of non-residential buildings
To alleviate the housing shortage, the experts also advocate repurposing non-residential buildings. According to conservative estimates, around 1.86 million apartments could be converted and converted in inner-city areas by 2040, as calculated by Arge.
“The potential for densification, for example through the addition of storeys to residential buildings and attic conversions, is an important addition to the creation of living space overall, since the designation of new building areas and plots of land has now reached a certain finiteness,” says the study. Existing buildings should therefore be checked for further use and their existing potential.
4. More possibilities for post-compaction
Densification is considered to be the most gentle form of urban development – but there is often great resistance to this in the immediate vicinity. According to studies, more than a million apartments could be built in multi-storey car parks and supermarkets – and at lower prices than many new buildings. According to the researchers, the area savings would be up to 250 million square meters, since no new areas would have to be sealed for this.
According to the study, simply adding a storey to the roof of residential buildings that were built between the post-war period and the end of the 1970s offers enormous potential: around 1.5 million new apartments could be created here with on-top floors. The study calls for the tax incentive systems for the conversion of commercial real estate into living space to be expanded.
5. More social housing measures
Social housing is scarce in many cities, and the waiting lists are long. For decades now, the stock of social housing has fallen steadily. According to the study, only every twentieth tenant now has social housing available, while significantly more than half of all tenants are entitled to social housing in terms of income.
In addition to the goal of 100,000 new social housing units per year, further funds would have to be used, including modernization within the framework of social housing promotion, an extension of document commitments, the purchase of document commitments and entitlements as well as tax incentives for, for example, public welfare apartments.
6. New skilled workers initiative
A major obstacle to the creation of a significant number of new buildings is the increasing shortage of skilled workers in the construction industry. According to the Cologne Institute for Economic Research (IW), there is currently a shortage of experts in 101 construction trades.
Around 55,600 positions could not be filled at the moment. “A long-term employment initiative is needed in the construction trade and the construction industry to expand the necessary capacities to implement the structural transformation of the residential building stock,” is the demand of the consortium study.
7. Digitization of administration
The metropolises often have a problem with the quick assignment of building applications. “More money would therefore be necessary for the digitization of the building authorities,” says IW real estate expert Michael Voigtländer. The economist believes that a federal urban development fund that improves the conditions for new construction makes sense. According to the Arge study, the necessary acceleration of planning and approval procedures for housing construction, which is also mentioned in the coalition agreement, is of considerable importance for the achievement of the goals set.
For this purpose, more skilled workers should be deployed in the building authorities in the short term. The building authorities and the entire construction process need to be digitized quickly, and type approvals for standardized and serial construction nationwide must be used.
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