How does Germany find living space again? This is the question that will be discussed in the Chancellery on Monday. It’s a crisis meeting – I wrote that off before it even started.
There is a permanent crisis in housing construction. There has been a lack of housing in Germany for years. But instead of building like crazy, projects are now being canceled. Families give up their dream of owning a house because of high costs, and companies go bankrupt. Tenants, owners, the construction industry – they all give the federal government a catastrophic report.
At a meeting in the Chancellery on Monday, they should all come together at the table and develop a plan on how more apartments can be built quickly and cheaply. But it’s clear right from the start: not everyone is pulling in the same direction. And the required state aid in the double-digit billions is hardly to be expected.
Why is Germany not making progress in housing construction?
The basic problem is well known: there has been a lack of living space in Germany for years, especially in metropolitan areas. Prices shot up due to low supply in both the rental and purchase markets. The traffic light government has therefore set itself the goal of creating 400,000 new apartments per year. But this goal keeps breaking her down. In 2022 there were almost 300,000, and the construction industry is expecting 230,000 to 250,000 new apartments this year. Next year it will be less than 200,000.
The main problem is the explosion in building interest rates since the start of the Ukraine war. Where less than one percent was required two years ago, today it is four. Added to this are high inflation and high material costs. Fewer and fewer private individuals want and can afford to build. Building applications, property sales, planning – everything is on the decline.
How have rents and purchase prices developed recently?
There have been hardly any affordable rental apartments in major cities for a long time. Recently, however, asking rents in smaller cities have risen even more sharply in percentage terms. This was most noticeable last year in Delmenhorst in Lower Saxony with an increase of 13.2 percent.
Purchase prices, on the other hand, have recently fallen more sharply than at any time since 2000. In the second quarter, according to the Federal Statistical Office, residential real estate prices fell by an average of 9.9 percent compared to the same period last year. But because of the increased interest rates, many people cannot afford even that.
How is the federal government trying to counteract this?
At the beginning of 2022, it launched an alliance in which politicians, local associations, the housing and construction industry, trade unions, churches, environmental, consumer protection and social associations should work together to develop solutions. The result was 187 measures, most of which were implemented – but ultimately brought little improvement.
Some alliance partners are so disappointed with the government that they are boycotting Monday’s meeting. The Federal Association of German Housing and Real Estate Companies (GdW) and the owners’ association Haus & Grund are not present in the Chancellery. They criticize the traffic light government for not taking the situation seriously enough. None of their crisis measures are achieving their goal.
What kind of crisis measures are these?
The federal government, especially Construction Minister Klara Geywitz (SPD) and Economics Minister Robert Habeck (Greens), who is responsible for renovations, are trying to counteract this with funding programs for builders and tax advantages for companies. In some cases, funding was so ripped out of their hands that the pots were exhausted prematurely and builders who had planned to use the aid came away empty-handed.
However, other programs such as cheap new construction loans for families with little income did not work at all. Only 104 applications were submitted in the first two months. The construction industry particularly criticizes the income limit of 60,000 euros. With this income you can hardly afford to build, even with cheap credit. However, families who earn more are not supported by the government. Before the crisis meeting, Geywitz announced that he would raise the income limit and the loan amount.
Are there any new funding programs planned?
Yes, for example for the purchase and renovation of an older house. However, details about this are not yet known.
What role does climate protection play?
The building sector is one of the biggest problem children when it comes to climate protection – because of fossil heating, poor insulation and old windows. Government funding is therefore usually linked to building or renovating your house in a climate-friendly way. But that makes the projects expensive. Geywitz is therefore against, for example, mandatory minimum efficiency standards for buildings, as are being discussed in Brussels. That stops people from buying unrenovated houses, she says.
With regard to new buildings, it is also clearly distancing itself from the EH40 energy saving standard that the traffic light agreed in the coalition agreement for 2025. This concentrates too much on insulation and heating, says Geywitz. It must also be taken into account whether environmentally friendly building materials are used and space is saved.
Is the crisis meeting just a show event?
Geywitz has promised to expand existing programs and also new aid. However, it will hardly be able to meet the demands of the numerous industry and lobby associations for tax relief and economic stimulus programs worth 50 billion euros, a real housing construction “oomph”. The federal budget and the debt brake set limits that are too narrow. Finance Minister Christian Lindner (FDP) is unlikely to agree to double-digit billion sums for the construction industry.