Housing: Building permits continue to collapse

The housing shortage in Germany is threatening to get worse.

Housing: Building permits continue to collapse

The housing shortage in Germany is threatening to get worse. The decline in building permits continued unabated in August, as data from the Federal Statistical Office show. Construction and real estate associations called on politicians to quickly implement the resolutions of the housing summit in September and to initiate further help for builders.

The known measures could only have an effect in the medium term, said the general manager of the construction industry association HDB, Tim-Oliver Müller. "But if the government does not take further initiatives beyond the announced means, the housing shortage will become one of the most pressing political problems of the coming year."

Expensive materials and increased interest rates

According to the Federal Statistical Office, the construction of 19,300 apartments was approved in August - almost a third (31.6 percent) or 8,900 approvals fewer than in the same period last year. In the first eight months of 2023, the number of building permits for apartments fell by 28.3 percent within a year, a decrease of 69,100 to 175,500 apartments. The statisticians in Wiesbaden said that rising construction costs and increasingly poor financing conditions are likely to have contributed to the decline.

With a population that has increased by a good three million people, Germany has fallen back to the approval level of the beginning of 2014, said HDB Managing Director Müller. “This means that neither the people in the country are provided with enough affordable housing nor do we become attractive for skilled immigration.”

Building permits are an important indicator with a view to the housing shortage, especially in cities. Because what is not approved today will not be completed later - for example in the rental market, where the lack of housing is causing upward pressure on prices. Building Minister Klara Geywitz (SPD) admitted that the traffic light coalition would miss its target of 400,000 new apartments annually.

Some declines of over 50 percent

Between January and August, 143,900 apartments were approved for new residential buildings, almost a third (32 percent) less than in the same period last year, the statisticians calculated. The number of building permits for single-family homes fell by almost 38 percent. In the case of two-family houses, the number of approved apartments has more than halved (minus 52.5 percent). For the type of building with the most apartments, apartment buildings, approvals fell by 28 percent. Only residence halls saw an increase.

Despite great demand for living space, the number of building permits has been falling for months - expensive materials and sharply increased interest rates are putting pressure on builders; Private house builders as well as large investors are holding back. According to an Ifo survey, 21.4 percent of construction companies were affected by cancellations in September. In the first half of the year, sharp price increases for many materials made construction even more expensive, including cement and building sand, the Federal Statistical Office recently found. Almost all building materials are more expensive than before the energy crisis.

Call for more support from politicians

Felix Pakleppa, general manager of the Central Association of the German Construction Industry, called for the resolutions of the housing construction summit to be implemented quickly. "If the government's commitment is not followed by action now, we won't even be able to create 250,000 apartments next year."

HDB Managing Director Müller pointed out that many of the points in the construction package depend on the approval and implementation of the federal states, such as speeding up building permits or reducing property transfer tax. The construction ministers' conference in November must deliver. He also called for an interest reduction program to be examined quickly. The President of the Central Real Estate Committee, Andreas Mattner, made a similar statement. A large-volume loan program from the state development bank KfW with an interest rate of two percent for new buildings with energy standard EH55 or higher is overdue.