Housing construction resists the crisis - however, the end is imminent.
In 2023, approximately the same number of apartments were constructed as in the previous year. However, the industry feels that "focusing on the past" might not be ideal. After all, a significant downturn was predicted for quite some time.
Germany witnessed the construction of 294,400 apartments in 2023, which was a decline of 900 units or 0.3% as compared to the year before, as per the Federal Statistical Office statistics. Despite the slump in residential construction, the development maintained surprising stability. Nevertheless, the industry cautions against complacency and looks with concerned eyes to the future since the number of building permits, a sign of impending completions, has plummeted. The government authorized the construction of only 260,000 apartments in 2023, the lowest figure since 2012.
The high cost of construction materials and elevated interest rates due to high interest rates are discouraging potential homebuilders and investors. Consequently, the German residential construction sector is presently experiencing a serious downturn. The industry has long been requesting greater government assistance in this area, such as interest rate support programs for private investors. Additionally, they're advocating for a reduction in stricter construction standards, specifically in energy efficiency requirements.
The figure for building permits also slumped during the first quarter of 2024 by 22.2% to 53,500 apartments. The housing industry organization GdW remarked that this represents an "alarming decline". The ruling traffic light coalition had set a goal of constructing around 400,000 new residences annually. "Even if the 2023 completion numbers are not as gloomy as predicted, it simply means that the worst is yet to come," predicted Tim-Oliver Müller, Managing Director of The Federation of the German Construction Industry.
Of the operational apartments built last year, 257,200 were new constructions. 69,900 of these were standalone houses. There was a sharp drop of 9.3% in this category. In contrast, the number of new apartments in dual-family houses increased by 3.8% to 23,800. Altogether, 156,300 new apartments were created in multi-family houses, marking a 4.1% growth from the previous year. In addition, 7,300 new apartments were built in residential buildings.
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Despite the decline in apartment construction, the residential segment within the larger construction industry continues to be a concern. Specifically, the residential construction sector is grappling with high material costs and interest rates, leading to a significant downturn in new construction projects.
Moving forward, industry leaders have urged the government to implement measures such as interest rate support programs for private investors and relaxed construction standards, particularly in energy efficiency requirements, to help revitalize the residential construction sector.
Source: www.ntv.de
