Too high costs
Building permits are falling sharply
08/18/2023 10:04 am
Rising costs and poor financing conditions are causing the number of permits to build apartments and houses to fall sharply year-on-year. The responsible Minister Klara Geywitz has announced a package of measures.
Due to the slump in residential construction, building permits in Germany collapsed in the first half of the year. The authorities gave the go-ahead for the construction of just 135,200 units, according to the Federal Statistical Office. This was 50,600 or 27.2 percent fewer than in the first half of 2022. In June alone there was a decrease of 28.5 percent to 21,800 apartments compared to the same month last year. “Increasing construction costs and increasingly poor financing conditions are likely to have contributed to the decline in construction projects,” the statistical office said.
According to Building Minister Klara Geywitz, the federal government wants to curb the decline in housing construction with tax breaks. The SPD politician recently announced a package of measures for September. Two weeks ago, Geywitz proposed degressive depreciation in residential construction. Builders could then write off 48 percent of the costs for tax purposes within the first eight years.
From January to June, a total of 111,500 apartments were approved for new residential buildings – 30.8 percent or 49,600 fewer than a year ago. The number of building permits for single-family homes fell by a good third to 27,000. In the case of two-family houses, the number of approved apartments fell by more than half (-53.4 percent) to 7700. Even in the building type with the most apartments overall, multi-family houses, the number of approved apartments fell significantly, and by more than a quarter (-27.0 percent) to 72,400.
The Federal Association of Housing and Real Estate Companies (GdW) expects only 214,000 new apartments in Germany for 2024, the federal government’s target is 400,000.