Permits for construction fail to materialize from the designated source
Struggling construction industry grapples with high expenses and mortgage rates. Despite a glimmer of hope, the number of building permits issued is substantially lower than last year's count. In the initial four months, permits issued decreased by approximately 20% compared to the previous year.
Germany's housing construction sector isn't picking up pace. According to the Federal Statistical Office, building permits issued for both new and renovated residential units in April were significantly below the figures from the previous year. specifically, 14,300 new units were counted, which is a 17% decrease compared to the same month last year. The total number of permits issued for new and renovated units combined also saw a 17% drop compared to the previous year's count.
Construction projects have become noticeably costlier due to the sharp rise in mortgage rates and construction costs over the past two years. The decrease in building permits has been ongoing for months. Construction and real estate industry associations are advocating for increased government funding in response to the urban housing shortage.
Industry mood lightens
However, there's a slight improvement in the construction industry's mood, according to a survey by the Munich IFO Institute. The Institute stated that the business climate in residential construction "substantially improved," while the majority of companies still express pessimism. The business climate in civil engineering also "markedly improved." "The road to recovery is still long," noted IFO expert Klaus Wohlrabe.
From January to April, permits were issued for 57,100 new housing units - a 23.7% decrease compared to the same period the previous year. The number of permits issued for single-family homes saw a sharp drop of nearly one third (32.5%) to 12,300 units. For the most common building type, multi-family houses, there was a decline of 20.2% to 38,500 housing units.
The total number of permits issued from January to April, including residential unit renovations, amounted to 71,100 housing units. This is a 21% decrease compared to the same period the previous year.
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The construction industry, facing high expenses and mortgage rates, is looking to the federal government for increased funding to address the urban housing shortage. Despite a slight improvement in industry mood, as reported by the Munich IFO Institute, the number of building permits issued for residential construction has significantly decreased, according to the Federal Statistical Office. This decrease in permits can be seen in both new and renovated residential units, with a 17% drop in new units and a 17% drop in the total number of permits issued. This decrease in residential construction permits is part of a larger trend in the construction industry, which has been grappling with costlier projects due to rising mortgage rates and construction costs.
