Banks - Sparkassen: Improvement in housing finance
The Baden-Württemberg Sparkassen are observing the first signs of improvement in the crisis-ridden construction and real estate sector. In the first half of 2024, new business with residential construction financing – both private and commercial – increased to 5.3 billion Euro, according to the Sparkassenverband in Stuttgart. This is a significant increase of nearly 23% compared to the weak previous year's period.
In residential construction financing, the Sparkassen experienced an unprecedented decline in the first half of 2023. The new business had dropped significantly by about 60% to 4.3 billion Euro. Many private home builders and investors have recently put their construction projects on hold due to rising interest rates, high construction costs, and uncertainty about state subsidies. New building permits consequently saw a sharp decline, and loans were less in demand.
Sparkassen President Matthias Neth stated: "The new business has reached a low level. This is an initial sign that the bottom has been reached." However, a turnaround in the construction sector is not yet in sight. This requires significant impetus from both state and federal politics, such as a reduction in land transfer taxes.
Companies are holding back on investments
However, the Sparkassen had to make cuts in corporate lending: The new business commitments in the first six months of the year amounted to 6.4 billion Euro – 7.1% below the value of the previous year's period. Neth attributed this to the strained economic situation: "Many companies in the country are currently operating with a cautious handbrake and are holding back on investments," he said.
Overall, new business grew by 3.8% compared to the weak first half of 2023, reaching 11.5 billion Euro. The 50 Sparkassen in the Southwest had a combined total of over 165.6 billion Euro in loans at the end of June. Customer deposits amounted to over 171 billion Euro at the same point in time.
The balance sheet total increased by 1.2% to 244.3 billion Euro. The Sparkassen do not express their results for the first half of the year. They have approximately 1,700 branches and over five million private and corporate customers in the country.
- The improvement in the real estate sector, as observed by the Baden-Württemberg Sparkassen, is partially attributed to a correction in construction costs.
- In Baden-Württemberg, the Sparkassen's quarterly figures for 2024 showed an increase in new business in the real estate sector, particularly in residential construction financing.
- Despite the improvement in the real estate sector, high construction costs continue to pose challenges for private home builders and investors in Baden-Württemberg.
- The Baden-Württemberg Sparkassen's corporate lending saw a decrease in new business commitments in the first half of 2024, partly due to the high construction costs affecting construction and real estate projects.
