Housing goal unattainable
Drastically fewer building permits in February
April 18, 2024, 10:54 a.m
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Despite great demand, the number of building permits continued to collapse in February. An expert warns that the ECB’s interest rate increases mean that there is still no end to the decline in sight. The federal government’s annual housing construction target is not possible until 2025 at the earliest.
Housing construction in Germany continued to collapse in February. With 18,200 approved apartments, that was 18.3 percent less than in February 2023 and 35.1 percent less than in February 2022, as the Federal Statistical Office in Wiesbaden announced.
In the two months of January and February, 28,200 apartments were approved in planned new buildings – a decrease of around 25 percent compared to the same period last year, the office said. With around 35 percent or 6,100 fewer building permits than in the previous year, the number of new single-family homes shrank the most. Approvals for two-family homes fell by around 15 percent to 2,200, and for multi-family homes by 21.5 percent to 18,600.
“There are no signs of bottoming out yet when it comes to building permits for new apartments in Germany,” explained the scientific director of the Institute for Macroeconomics and Economic Research (IMK) of the Hans Böckler Foundation, Sebastian Dullien. Although the downward trend has slowed somewhat recently, the trend is still clearly downwards. Associations in the construction and real estate industry continue to push for more subsidies from the federal government.
Only from 2025 will more housing be built
The biggest burden on housing construction is the historically strong interest rate increases by the European Central Bank (ECB) over the past two years. “The interest rates for ten-year real estate loans had at times almost quadrupled from around one percent and are now still more than three times as high as at the low point,” explained Dullien.
The federal government’s original goal of building 400,000 new apartments in Germany every year is “unattainable” for this legislative period. Dullien estimates that the current level of building permits corresponds to just over 200,000 newly built apartments per year. He doesn’t expect a trend reversal in housing construction until 2025, “when the ECB has noticeably reduced interest rates and these interest rate cuts also have an impact on construction demand.”