‘It can’t go on like this’: Germany’s housebuilding crisis deepens

Düsseldorf’s harbour skyline. Half the population of the city are eligible for subsidised housing based on their incomes (Mapics/Dreamstime)
Building permits for apartments in Germany fell by 18% in February compared with February 2023, official statistics reveal.

The Federal Statistical Office said the figure was 35% less than in February 2022. 

Last month, the Office said the price of residential property fell 7.1% in the fourth quarter of 2023. 

News agency Der Speigel notes that the collapse in the housing market, now in its third year, is the most severe in decades.

Andreas Mattner, the president of the German Property Federation, called on state governments to cut a property sales tax to stem the decline.

“Housing construction is in a downward spiral. It can’t go on like this. It must be stopped at all costs,” he said

The sales tax varies between 3.5% and 6.5%, depending on the state.

Sebastian Dullien, scientific director of the Institute for Macroeconomics and Economic Research, told Speigel that there was no sign of the crisis coming to an end.

He said the federal government’s original goal of building 400,000 apartments a year was unattainable, and the real rate would be half of that figure.

The collapse is blamed on a sharp rise in interest rates to 4.5%, brought on by the inflationary wave caused by the ending of Germany’s access to cheap Russian energy.

The first cut in rates is not expected until June.

The situation comes despite a rise in demand for affordable housing. According to the Statistical Office, there is a shortage of more than 800,000 apartments in Germany, a figure that is growing.

More than 9.5 million people, mostly single parents and their children, live in cramped conditions with skyrocketing rents.

Peter Kox, managing director of the German Tenants Association, told news organisation Deutsche Welle that almost half the population of Düsseldorf, Cologne and Bonn were eligible for subsidised housing based on their incomes.

“These days, it’s not just those on public assistance who are frequently coming to us for help, but also average members of society,” he said.

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