The crisis in housing construction in Germany threatens to worsen. The number of building permits for apartments fell by around a quarter in the first half of the year, as reported by the Federal Statistical Office.

The numbers mean bad omens in the fight against the housing shortage and rising rents, especially in cities. Construction and real estate associations called for a new start in housing policy. Construction Minister Klara Geyitz (SPD) spoke out in favor of fewer regulations and serial construction.

Building permits collapse

According to the Federal Statistical Office, the construction of 135,200 apartments was approved from January to June – 27.2 percent or 50,600 fewer than a year earlier. In June alone, the number of building permits fell by 28.5 percent to 21,800. This includes permits for apartments in new buildings as well as for conversions.

The strong downward trend of the past few months continued with the new figures. “Increasing construction costs and increasingly poor financing conditions are likely to have contributed to the decline in construction projects,” explained the statisticians in Wiesbaden.

Shrinking numbers in all areas

There were declines in building permits for all building types. In the first half of the year, 111,500 apartments were approved for new residential buildings to be constructed – almost 31 percent or 49,600 fewer than in the same period last year. The number of building permits for single-family homes fell by a good third (minus 35.4 percent). In the case of two-family houses, the number of approved apartments fell by more than half (minus 53.4 percent). The number of approved apartments also fell significantly in the type of building with the most apartments, the multi-family houses – here by a good quarter.

Residential construction, which has been booming for years, has come to an abrupt halt due to the sharp rise in interest rates and more expensive materials. Geywitz has admitted that the traffic light coalition will miss its target of 400,000 new apartments per year. Real estate and building associations only expect around 245,000 new apartments this year.

Geywitz tries to counteract this

In order to boost housing construction, Geywitz had recently proposed significantly expanded tax incentives in housing construction. But the financing is still unclear. Geywitz sees the proposals as part of Finance Minister Christian Lindner’s (FDP) growth opportunities law. However, the adoption in the federal cabinet has been postponed due to a blockade in the traffic light coalition.

Geywitz also wants to streamline technical regulations, as she told the “Leipziger Volkszeitung”. “We have to build more simply again in Germany and curb the increase in costs.” She also relies on prefabrication in construction. “Serial housing construction is a way to build homes quickly.”

Real estate industry appeals to politicians

The real estate industry called for quick help from politicians. “There is an urgent need for a restart of housing policy,” said Andreas Mattner, President of the Central Real Estate Committee, with a view to the cabinet meeting at Meseberg Castle at the end of August. Among other things, he called for a suspension of the real estate transfer tax and a large-volume loan program from the KfW development bank with low interest rates.

Felix Pakleppa, general manager of the construction industry association ZDB, demanded a strong construction package. “The cabinet has to make a decision in Meseberg: Should the construction industry get the economy back on track or put its businesses and jobs on the sidelines?” The general manager of the construction industry association HDB, Tim-Oliver Müller, made a similar statement. The construction is “continued in the downward pull”. Among other things, he advocated the suspension of strict energy requirements in public funding programs.