In Germany, there were fewer purchases of building land last year than at any time since 1995, according to a study. This is a bad omen for housing construction, researchers warn.
Rising interest rates and high construction costs are preventing many people in Germany from buying building land. The number of transactions for residential building land ready for development in Germany reached a historic low in 2023, as did the associated area turnover, according to a study by the Hamburg Gewos Institute for Urban, Regional and Housing Research. The authors see this as a fatal signal in the fight against the housing shortage, especially in cities.
Last year, around 46,700 purchases of residential land ready for development were registered nationwide, 34 percent fewer than in the previous year, according to the study, which is based on actual transactions. The area turnover fell by almost 40 percent to around 4,400 hectares and the monetary turnover by more than 45 percent to 8.9 billion euros.
“Both the number of transactions and the area turnover in 2023 marked lows since the start of the all-German time series of the study in 1995,” said Sebastian Wunsch, Head of Real Estate Analysis at Gewos. “The areas not sold today are the permits not granted tomorrow and the apartments not built the day after tomorrow,” he warned. Densification and extensions alone will not close the gap in demand.
With the real estate market analysis IMA, Gewos records the land purchase contracts concluded annually for all independent cities and districts. The analysis has been carried out since 1982.
Sales of residential building land have roughly halved since 2021
Compared to the peak in 2021 in the midst of the real estate boom, the declines are even greater: In comparison, sales of residential building land have plummeted by 54 percent, while sales of space and money have fallen by around 58 percent and around 60 percent respectively.
Sales of building land are a good early indicator for new construction, it said. “While the decline in building permits in this and the coming years is likely to be reflected in falling completion figures, the low sales figures for residential building land ready for construction and land under construction indicate a long-term low level of new construction activity in Germany.” There are also significantly falling figures for land under construction, i.e. areas that could potentially be used for housing construction.
According to the Federal Statistical Office, 294,400 apartments were completed in 2023 – slightly fewer than in the previous year (295,300), but significantly more than economists and the real estate industry initially feared. The weak construction industry and the decline in building permits are only likely to have a delayed impact on production figures.
In its coalition agreement, the federal government had originally targeted 400,000 new apartments per year. However, in addition to complicated requirements, rapidly rising construction costs and interest rates are putting a strain on housing construction.
Source: Stern
