Housing Crisis in Germany: New Apartment Construction Continues to Decline
The number of new apartments in Germany is expected to drop significantly this year, raising concerns among industry experts.
According to the latest Spring Report released by a group of real estate experts known as the 'Immobilienweisen', the construction of new apartments in Germany is facing a significant decline.
The report indicates that only 230,000 new housing units are anticipated for this year, a decrease from the 294,000 units completed in 2023 and 260,000 units in the previous year.
This falls drastically short of the German government's target of 400,000 new apartments annually.
The Immobilienweisen describe the current situation as a 'deep-seated crisis' within the housing market, emphasizing the widening gap between the high demand for housing and the lagging construction activity.
Iris Schöberl, President of the Central Real Estate Committee (ZIA), stated that the current scenario calls for a political reboot to address the growing challenges in the real estate sector.
The report highlights that the shortage of housing is exacerbating in many cities, leading to increased rents and property prices.
Experts foresee that rents, particularly in sought-after urban areas, are likely to continue rising.
Factors contributing to this trend include a heightened preference for renting over buying amidst increasing interest rates, which boosts demand for rental properties.
Additionally, high construction costs and interest rates are likely to restrict new housing supply, further impacting rental availability.
Furthermore, the report warns that stagnating or declining construction activity could keep property prices elevated, with potential increases in prices expected as the economic environment stabilizes despite previous fluctuations linked to rising financing costs.
To counter these challenges, the expert group has proposed an extensive package of measures aimed at revitalizing the housing market.
Recommendations include expediting planning and approval procedures through digital solutions, reducing bureaucracy, increasing staffing in building authorities, and enhancing land activation by municipalities.
They also suggest fostering standardized construction processes, lowering property acquisition taxes, and easing construction regulations.
Schöberl stated, 'The real estate sector, which contributes nearly 20 percent to Germany’s gross value added, can serve as a significant economic engine if allowed to perform effectively.'
The report indicates that only 230,000 new housing units are anticipated for this year, a decrease from the 294,000 units completed in 2023 and 260,000 units in the previous year.
This falls drastically short of the German government's target of 400,000 new apartments annually.
The Immobilienweisen describe the current situation as a 'deep-seated crisis' within the housing market, emphasizing the widening gap between the high demand for housing and the lagging construction activity.
Iris Schöberl, President of the Central Real Estate Committee (ZIA), stated that the current scenario calls for a political reboot to address the growing challenges in the real estate sector.
The report highlights that the shortage of housing is exacerbating in many cities, leading to increased rents and property prices.
Experts foresee that rents, particularly in sought-after urban areas, are likely to continue rising.
Factors contributing to this trend include a heightened preference for renting over buying amidst increasing interest rates, which boosts demand for rental properties.
Additionally, high construction costs and interest rates are likely to restrict new housing supply, further impacting rental availability.
Furthermore, the report warns that stagnating or declining construction activity could keep property prices elevated, with potential increases in prices expected as the economic environment stabilizes despite previous fluctuations linked to rising financing costs.
To counter these challenges, the expert group has proposed an extensive package of measures aimed at revitalizing the housing market.
Recommendations include expediting planning and approval procedures through digital solutions, reducing bureaucracy, increasing staffing in building authorities, and enhancing land activation by municipalities.
They also suggest fostering standardized construction processes, lowering property acquisition taxes, and easing construction regulations.
Schöberl stated, 'The real estate sector, which contributes nearly 20 percent to Germany’s gross value added, can serve as a significant economic engine if allowed to perform effectively.'
Translation:
Translated by AI
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