“Alarming crash” in the German construction industry

“Alarming crash” in the German construction industry
The construction industry in Germany is in distress.

The lull in construction continues in Germany. From January to March, the construction of 53,500 apartments was approved, which was 22.2 percent or 15,200 apartments less than in the same quarter last year. This is according to figures from the Federal Statistical Office.

“The building permit figures are historically bad and are only continuing the negative trend,” said President Dirk Salewski of the Federal Association of Independent Real Estate and Housing Companies (BFW). The Association of the Housing Industry GdW spoke of an “alarming crash”. In March, there was a decrease of a quarter to 18,500 within a year. Compared to March 2022, the number of building permits even fell by almost 47 percent or 16,300 apartments.

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As in Austria, expensive materials and financing problems are putting off many potential home builders and investors in Germany. As a result, building is currently hardly worthwhile for property developers and project developers. The industry has long been calling for more government support – for example through interest rate support programs for private investors. The lobby is also calling for a relaxation of the more expensive building standards, for example in terms of energy efficiency. Last year, the number of building permits fell to 260,000 apartments, the lowest level since 2012.

The German government’s annual goal is 400,000 new homes. “The really hard times are yet to come,” warned BFW President Salewski. “Anyone who now acts as if we have passed through the valley of tears is in reality just resting on their laurels from the day before yesterday.” Every second company is complaining specifically about a lack of orders. “No planning is being done now, and therefore no construction will take place in the coming years,” stressed Salewski. “The lean years are clearly still ahead of us.” According to Felix Pakleppa, General Manager of the ZDB construction association, there is currently no turnaround in sight: “We are urgently waiting for the start of the newly announced funding programs for new construction.” Announcements are not enough here, and implementation in the second half of the year is too late.

“Don’t always call on the state”

Tim-Oliver Müller from the German Construction Industry Association (HDB) appealed to the public sector to simplify and speed up construction. Municipalities must allocate more building land. In addition, planning and approval times are too long and environmental protection requirements are excessive.

“We don’t want to keep calling on the government, but rather create affordable housing for broad sections of the population through our own solutions,” said Müller. Until that is possible, however, the federal and state governments must also take on responsibility.

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