Costs have risen sharply: This is the situation with housing construction in Germany

Costs have risen sharply
This is the situation with housing construction in Germany

By Nele Spandick

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Last year, almost 300,000 housing units were built in Germany. That is too few, but still surprisingly high. The housing construction figures are categorized: from single-family homes to social housing.

0.3 percent, that is the first figure to appear for the housing construction figures for 2023. The number of completed apartments has fallen by 0.3 percent. Sounds bad at first. Is it really? Five insights behind the numbers:

1. It went better than expected

Last year, the construction associations suspected a “disaster in construction”. The number of new buildings would fall below the 250,000 completed housing mark, almost “rushing down”. Well, things turned out differently. The numbers remain almost unchanged, 294,400 housing units were built in 2023. That’s pretty good – at least considering the situation the construction industry was in last year. The high interest rates and high material prices caused many companies to groan, and hardly anyone would have expected that the same number of apartments would be built as in the previous year. (And still more apartments than in most years since 2000.)

2. It still went worse than it should have

Of course, it is still not enough. Not only did the federal government set a target of 400,000 new apartments per year in the coalition agreement, but this figure has always been too low compared to actual demand. According to a calculation by the Pestel Institute for the Tenants’ Association, Caritas and the Construction Union, 800,000 apartments are missing.

3. The funding of the past was rubbish

One reason why many had expected worse figures for 2023 is the expiration of state subsidies. Both the child building allowance and the subsidy for houses with energy standard 55 were discontinued in January 2023. The fact that the figures remained the same nevertheless suggests that the subsidies of the past few years were wasted: the apartments that were created with them would probably have been built even without state money.

4. There is a change from single-family homes to apartments

Now it is unmistakable that the costs of building a new house have risen sharply. This is not so much reflected in the total number of completed houses, but rather in the breakdown of the types of housing that have been built. The high costs have apparently deterred families in particular who wanted to build a house. (The abolition of the child building allowance also had the greatest impact there.) 7,200 fewer single-family houses were built than in the previous year, which is 9.3 percent. In multi-family houses, on the other hand, 4.1 percent more apartments were built than in the previous year, with a total of 156,300 new apartments. The number of completed residential units in two-family houses also rose by 3.8 percent.

5. There is a trend reversal in social housing, even if the number continues to decline

There are ambiguous signals in social housing: the number of social housing units has fallen by 14,082, which is due to the fact that more units are being released from the contract than new ones are being added. Nevertheless, the number of newly built subsidized housing units rose by around 8,400 units. A total of 49,430 social housing units were built in 2023. The decline is therefore lower than it has ever been in the last 15 years. In some federal states, the number of social housing units is now even increasing, this is particularly noticeable in Saxony-Anhalt with an increase of 12.66 percent.

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