The decline in building permits continued rapidly at the beginning of the year. In January, 21,900 apartments were approved in Germany, a good quarter (26 percent) or 7,700 approvals fewer than in the same month last year. This was announced by the Federal Statistical Office in Wiesbaden.

The figures include both building permits for dwellings in new buildings and new dwellings in existing buildings.

In January, 18,700 apartments were approved for new residential buildings, a decrease of 28.5 percent within a year. The permits for single-family houses fell by a good quarter and for two-family houses by almost half. In the numerically strongest type of building, multi-family houses, the number of approved apartments shrank by almost 29 percent.

Sharply increased interest rates on loans and high construction prices

Building permits are an important indicator of the housing shortage in many cities. Despite the high demand for living space, the number of building permits fell by almost seven percent last year to 354,400 projects, the lowest level since 2018. Because of the sharp increase in interest rates on loans and high building prices, many builders are holding back on projects or canceling them – from private house builders to large investors.

New business with mortgage lending has also been shrinking for months, in January it halved compared to the same month last year. Building Minister Klara Geywitz (SPD) has admitted that the traffic light coalition will miss the target of 400,000 new apartments per year.

In view of the slump in building permits, the construction industry association HDB called for the federal government to significantly increase its new construction subsidies. “Otherwise, not only new residential construction will experience a significant slump in both 2023 and 2024,” said Managing Director Tim-Oliver Müller. The housing construction companies also found themselves in an increasingly difficult situation in the medium term. The Central Association of the German Construction Industry (ZDB) stated that the “strict conditions” in the KfW subsidy programs should be suspended for a certain period of time.