The volume of residential building permits issued in Germany increased by more than 20% last year amid a boom fuelled by a swelling population, increased job security and record-low borrowing costs.
German Housing Minister Barbara Hendricks told Reuters on 15 January that soaring demand for real estate will support higher economic growth this year in Europe’s biggest economy.
The industry is being given an extra push by increased state spending on social housing, needed in part to accommodate a record influx of refugees. (See image above with temporary accomodation being assembled in October 2015.)
"We have succeeded in initiating a turnaround in housing construction within a very short time," Hendricks said in an interview with Reuters.
Permits were issued for more than 380,000 residential buildings in 2016, up from the 313,000 permit issued in the previous year, she said.
Hendricks said that was the highest number of permits issued in a year since 2000.
Also contributing to the heightened building activity are a shortage of housing in cities, and low interest rates, which are luring people into buying homes instead of renting.
Reuters reports that construction industry associations expect home sales to rise by 5% this year to hit the highest level since 1995, following growth of 5.8% in 2016.
In Germany construction contributed 0.3 percentage points to an overall GDP growth rate of 1.9% last year, the strongest in five years.
An unprecedented 1.1 million refugees entered Germany in 2015 at a time when German cities already lacked an estimated 800,000 affordable flats due to higher EU immigration, reported Reuters.
As a result, property prices and rents have soared in cities like Berlin, Hamburg and Munich.
According to Reuters, property experts say that at least 350,000 new homes are needed every year until 2020.
Construction associations estimate that between 280,000 and 290,000 new homes were completed in 2016 and they expect up to 320,000 this year, said Reuters.
Image: Temporary housing being assembled for refugees in Germany, October 2015 (Ichwarsnur/Creative Commons)