Germany urgently needs more housing – but high prices and interest rates often make new construction unprofitable. Could lower standards be a solution?
No basements, fewer balconies, thinner ceilings: From the perspective of the construction industry, simpler apartments could get housing construction in Germany going again. Currently, the gold standard is often being built unnecessarily – at high costs, so that the apartments are hardly affordable for consumers, explained seven housing associations in Berlin. In view of the dramatic crisis in housing construction, the alliance of associations called on politicians to question their standards.
State funding is currently aimed at expensive construction with high efficiency standards, criticized the President of the Federal Association of German Housing and Real Estate Companies, Axel Gedaschko. What is needed, however, is “not to promote icing, but rather affordable brown bread.” Currently, new buildings are neither affordable for the builder nor for future tenants – which is why there are not enough new apartments being built in Germany.
Dramatic declines in housing construction expected
In fact, housing construction is in crisis: there is a shortage of hundreds of thousands of apartments nationwide – and at the same time building permits are collapsing. According to a current study by the Arge construction research institute, this is due, among other things, to the fact that construction costs have risen by a whopping 42 percent in the last four years. At the same time, building interest rates rose.
According to a forecast by the Euroconstruct research network, 175,000 residential units are likely to be completed in Germany in 2026 – 95,000 fewer than in 2023 and far away from the federal government’s goal of 400,000 apartments per year. According to the Arge, there is now a shortage of around 800,000 apartments in Germany – especially affordable ones.
Excessively high standards for sound insulation and energy efficiency?
The main problem is that construction costs are far too high, said the President of the Federal Association of Independent Real Estate and Housing Companies, Dirk Salewski. In times of low interest rates, people in Germany have gotten used to “building a lot of sugarcoating that no one really needs.”
“We must be allowed to come down from this,” demanded the President of the Central Association of the German Construction Industry, Wolfgang Schubert-Raab. Example of sound insulation: 22 centimeters thick ceilings are currently being built with a lot of steel – but even 18 centimeters are completely sufficient.
No elevator, no balconies, that saves a lot of money, emphasized Gedaschko. Barrier-free apartments can be offered on the ground floor. But in many cities, housing companies would not get a building permit this way.
Arge study director Dietmar Walberg emphasized that lower requirements do not mean that people can no longer live well in the apartments. Even if only the minimum requirements for energy efficiency were met, you would not be living without insulation, but would still have a standard that is unique in Europe. At the same time, there is no additional energy saving if you turn 16 centimeters of insulation into 25 centimeters.
The study commissioned by the Housing Construction Association comes to the conclusion that the majority of current construction standards in housing construction are “dispensable both economically, in terms of a general, appropriate and good standard of living and in terms of actually effective climate protection”. “A lot of things are built to high-end standards because there is no other funding,” explained Walberg.
Housing construction as an economic factor
The housing crisis is not only causing a lack of affordable housing – according to a second study, it could also hit the entire German economy hard.
From an economic perspective, the industry is almost as important as the automotive industry, according to the consulting firm DIW Econ on behalf of the Housing Construction Association. The expected five percent decline in housing construction will lead to reduced tax revenue of around five billion euros this year alone. Jobs could also be lost.
The industry associations are waiting for a “fatal development in which the crisis in housing construction threatens to trigger a domino effect and thus massive damage to large parts of the economy.” According to DIW Econ, a subsidiary of the German Institute for Economic Research (DIW), one in seven euros of gross value added in the economy as a whole has to do directly or indirectly with housing construction. Around one in seven jobs and 17 percent of tax revenue are related to this industry.
Special funding required
The association, which, in addition to the German Tenants’ Association and IG BAU, brings together associations from the housing and real estate industry as well as the brick industry and the building materials specialist trade, therefore called on federal and state politicians to take action. The industry is in a deep crisis and must be supported with immediate special funding. Specifically, subsidies amounting to 23 billion euros would be needed annually for 100,000 new social housing units and the construction of 60,000 affordable apartments.
Source: Stern
