- Fewer housing permits - Bavarian loan extended
Rising construction prices and higher interest rates are causing the housing market in Bavaria to shrink further. According to the State Office of Statistics, the number of residential building permits issued in the first half of the year fell by 16% to 25,220. The decline was particularly pronounced in larger cities, where permits fell by 25% compared to the previous year, and in rural districts, where they fell by 11%. Meanwhile, there was a slight increase in the addition of residential units in existing buildings, with authorities issuing 2.5% more permits for this.
Housing industry calls for less bureaucracy
The pressure on already tight rental housing markets is increasing, according to the Association of Bavarian Housing Companies. "For many companies, residential construction at affordable rents is no longer possible," said Hans Maier, director of the association. "Housing cooperatives have already hit the panic button," he added. The 356 housing cooperatives organized in the association will complete around 500 apartments by 2024. The housing industry needs stable funding and "better framework conditions for residential construction - for example, through less bureaucracy or simpler building standards."
The Munich-based Ifo Institute expects the nationwide downturn in the industry to continue. Construction costs are "out of control," and the wage agreement for the construction industry will lead to further cost increases.
State government extends application deadline for subsidized loans
However, the dream of homeownership could still come true for some homeowners in the Free State, despite the adverse conditions. According to Construction Minister Christian Bernreiter (CSU), the application deadline for the so-called Bavaria Loan has been extended to the end of August. "Unlike the traffic light government in Berlin, we are not ending our support with the Bavaria Loan overnight, but are instead adding an additional 30 million euros and extending the program until the end of the month due to its great success."
The Bavaria Loan is available to all households that create or acquire a family home for self-use through new construction, alteration, or expansion and meet the income limits for social housing. For example, the income limit for a four-person household with two children is around 101,400 euros gross per year. The loan amount is limited to one-third of the eligible total costs. One advantage of the subsidized loan is the interest rate, which is reduced by up to three percentage points compared to the market interest rate, with a minimum of one percent.
More than 3,000 families have realized their dream of homeownership with the loan since last year, according to the Ministry of Construction. "Our goal from the beginning was also to help the construction industry get back on its feet in a weak phase," said Minister Bernreiter. Around 90 million euros have been earmarked for the subsidized Bavaria Loan in this year's budget. The Free State has brought more than 500 million euros in loans to the market in this way.
The Association of Bavarian Housing Companies strongly advocates for "better framework conditions for residential construction, such as less bureaucracy or simpler building standards," echoing the housing industry's call for streamlined procedures. The Commission, in this context, could potentially play a role in evaluating and implementing measures to reduce bureaucratic barriers in the construction process.
Despite the challenges in the housing market, the Bavarian government has extended the application deadline for the Bavaria Loan, a program aimed at supporting families looking to build or acquire a home. This extension could be a decisive step taken by The Commission to alleviate the pressure on the housing market and support homeownership.
