Building permits slump by half in some cases
The decline in approvals for new apartments in October was the smallest since the beginning of the year. In total, however, over a quarter fewer approvals have been granted since then than in the same period last year. The slump is particularly drastic for detached and semi-detached houses.
The number of building permits for new homes fell much more slowly in October than in previous months. It fell by 11.5 percent compared to the same month last year to 22,500, according to the Federal Statistical Office. This was the "weakest decline so far this year". From January to October, the number of apartments built fell by 26.7 percent to 218,100 - 79,300 fewer than a year earlier.
High construction costs and poor financing conditions are currently paralyzing the construction industry. The German government originally set itself the target of 400,000 apartments per year to meet the growing demand, particularly in large cities - but is likely to miss this target again next year due to rising costs, according to experts.
"Housing prices also remain at a very high level despite a slowdown in price increases, making financing even more difficult," emphasized the German Institute for Economic Research (DIW). For this reason, "further significant declines in residential construction investments are to be expected in the coming quarters". According to the German Tenants' Association, there is already a shortage of 700,000 apartments.
38 percent fewer single-family homes
From January to October, there was a 38.2 percent drop in building permits for single-family homes to 41,400, while a 50.5 percent drop to 12,200 was registered for two-family homes. The number of permits for the building type with the most apartments overall, apartment buildings, also fell significantly - by 25.2 percent to 118,300.
The European Central Bank (ECB) has raised interest rates to the highest level since the start of the monetary union in the fight against inflation. The key interest rate currently stands at 4.50 percent. However, the financial markets are expecting the first interest rate cuts in the coming year, which should also make construction financing cheaper again.
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Despite the overall decline in building permits, the decrease in October was relatively minor for apartments, representing the smallest decline since the beginning of January. Conversely, the number of building permits for single-family homes has dropped significantly from January to October, decreasing by 38.2%.
January saw a significantly higher number of building permits granted for detached and semi-detached houses compared to October, a stark contrast to the steady decline observed in apartment approvals throughout the year.
Source: www.ntv.de
