Housing crisis continues
Building permits collapse by a third
06/16/2023, 10:48 am
Less and less is being built: The number of building permits in Germany fell by almost a third in April compared to 2022. The Federal Statistical Office cites increased interest and material costs as the reasons. The real estate association ZIA expects 1.4 million home seekers in two years.
The decline in building permits is accelerating given higher interest rates and material costs. In April is their number slumped more than it has since March 2007. Only 21,200 apartments were approved and thus 31.9 percent or 9900 fewer than a year earlier, as reported by the Federal Statistical Office. The number has been falling continuously since May 2022.
“High costs for building materials and increasingly poor financing conditions are likely to have contributed to the decline in construction projects,” the statisticians explained the downward trend. After eight interest rate increases in a row by the European Central Bank (ECB) to currently 4.00 percent, building loans have become noticeably more expensive. The currency watchdogs want to use it to fight inflation.
From January to April, a total of 89,900 building permits were issued for apartments, which was 27.3 percent fewer than in the same period last year. The figures include commitments for apartments in new buildings as well as for new apartments in existing buildings.
Above-average decline in building commitments
The number of building commitments for single-family homes fell by an above-average rate in April, namely by 33.5 percent to 18,300. In the case of two-family houses, there was an even greater decline of 52.1 percent to 5300. “Even in the case of the numerically strongest type of building, the multi-family houses, the number of approved apartments fell significantly,” emphasized the statisticians. Here there was a minus of 27.1 percent to 48,200.
The German Construction Industry Association (HDB) expects at best 250,000 completed apartments this year. That would be around 45,000 fewer than last year and a far cry from the federal government’s target of 400,000 new apartments per year. “Without major changes in the framework conditions, the result in 2024 is likely to be worse,” the association warned.
The real estate association ZIA expects a gap of up to 700,000 residential units and 1.4 million apartment seekers for 2025. The reason for this is the lack of construction projects due to skyrocketing construction prices and state regulation mania. “The state is responsible for 37 percent of the costs of living as a product,” said ZIA President Andreas Mattner of the “Bild” newspaper.