The trend reversal in the real estate market means that more and more projects are being stopped.
(Photo: dpa)
These are numbers that make you sit up and take notice. According to the Federal Statistical Office, for the first time in around eight years prices for apartments and houses have fallen compared to the previous quarter.
What prospective buyers are embracing with relief, however, has another side that is less gratifying for Germany: Currently, new construction in this country is literally collapsing in view of the more difficult framework conditions.
So should we be concerned? Yes, we absolutely should. Because the faltering new building is a fatal development. The demand for affordable housing, especially in metropolitan areas, is still greater than the supply.
The influx of millions of refugees from Ukraine and urgently needed skilled workers from abroad will increase the pressure in the years to come.
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However, it can already be foreseen that the supply of new apartments will be significantly smaller – and the trend will intensify. After all, housing construction is a long-term business: it’s like a tanker that is still lagging behind even though the ship’s propeller has long since stopped turning.
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But a tour de force to tackle the problem quickly is not in sight. On the contrary. According to the previous plans, the state KfW funding for the new building will be financially lower in 2023 than in 2022 – and the demands on the buildings will increase at the same time.
Housing construction is a long-term business: it is like a tanker that is still lagging behind even though the ship’s propeller has long since stopped turning.
Increased financing costs and rapidly increasing prices for building materials also make the planning of new buildings a financial gamble.
If we want to avert a fundamental housing shortage in Germany, we should act quickly:
- A reduction in the real estate transfer tax,
- fewer building codes and
- more serial production
can be part of the answer. However, it should also be considered whether the demands on energy standards, heating, comfort, security and fire protection of buildings really need to be raised even further.
All this makes building in Germany expensive, many think too expensive. The balancing act between stricter building specifications, growing financing costs and exploding material costs threatens to overwhelm the industry.
In the energy crisis, Germany is learning painfully that security of supply takes precedence when in doubt. “Wanting to do everything at once destroys everything at once,” wrote the writer Georg Christoph Lichtenberg.
A little more of this sense of reality would not hurt the German housing market either.
More: Sentiment in the real estate industry falls to a record low