Property market experiences fluctuations - The construction sector cannot rely on receiving additional government support.
The ailing construction sector won't be getting any more financial aid from the federal government at present, according to Building Minister Klara Geywitz and Finance Minister Christian Lindner at the Construction Industry Day in Berlin. The reason being, the budget is already strained. Their alternative suggestions involve expediting permit issuance and easing regulations that add to the cost of building.
The construction industry has been in a rough spot for the past two years due to rising interest rates and pricey construction materials. Companies are reporting a drought in new orders and even cancellations for planned projects. Only around 295,000 apartments were completed in 2022 and 2023 - a far cry from the traffic light coalition's planned 400,000 apartments annually.
Chancellor Olaf Scholz has called for urgent action. He said, "We need to build more and differently." He explained, "We don't want situations in Germany where low-income individuals are forced out of cities, followed by those with middle incomes."
Klara Geywitz emphasized the construction industry's significant role in spurring economic growth during economic downturns. "Germany has a problem with economic growth, and if the construction industry doesn't recover, overall economic growth won't happen either." Nonetheless, Klara believes the industry shouldn't solely lean on state subsidies. Only targeted funding for infrastructure and unfinanced projects is viable. She added, "Our goal should be to be able to build freely and profitably in Germany in the foreseeable future."
Lindner, too, prefers private investments over public funding. As the FDP leader said, the majority of residential construction investments must be from private sources. However, state responsibility lies in providing funds for public infrastructure such as bridges, railways, roads, and digitalization. To give the construction industry a break, Lindner suggested that existing high standards for energy efficiency, noise protection, and fire protection should not be intensified. He also believes that the state should avoid further complicating the rental law beyond the rent cap.
Scholz also suggested companies start building more apartments for their own employees. "That's almost out of style, and I hope the fashion changes," said Scholz. To encourage this, the federal government has just created tax benefits for socially minded companies that offer apartments at affordable prices. "Now it's time for many companies to realize this could be beneficial for HR (human resources)." The cabinet has recently created tax benefits for socially oriented companies that provide subsidized rent apartments.
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The construction industry's struggle with high interest rates and expensive materials has led to a decrease in new orders and project cancellations, resulting in fewer apartments being completed than planned by the traffic light coalition. Klara Geywitz, the Building Minister, advocates for expediting permit issuance and easing regulations to aid the industry, emphasizing its importance in driving economic growth during downturns. Finance Minister Christian Lindner supports private investments and suggests reducing energy efficiency, noise protection, and fire protection standards to lessen the burden on the construction sector. Chancellor Olaf Scholz encourages companies to build more affordable apartments for their employees and has introduced tax benefits for socially-minded corporations providing such housing. The SPD, a coalition party, has been called upon to contribute to housing policy solutions. The crisis in the real estate market and construction industry has been a topic of concern in Berlin and Germany as a whole.
