Building permits in Germany continue to fall sharply


Lerato Khumalo

There is a shortage of housing in many German cities. There are several reasons why building permits in Germany are declining sharply.

The decline in building permits for apartments in Germany has continued rapidly. In November, the construction of 24,304 apartments was approved, a good 16 percent fewer than in the same period last year, the Federal Statistical Office announced on Wednesday in Wiesbaden. From January to November, 321,757 apartments were approved, a decrease of 5.7 percent compared to the same period last year. The decline was particularly sharp for single-family homes (minus 15.9 percent).

The number of building permits is an important indicator in view of the housing shortage in many cities. However, approved apartments are often not built at first because tradesmen and construction companies do not have the capacity. The sharp rise in the prices of building materials and building land is also slowing things down. For example, the prices for new conventionally manufactured residential buildings rose by almost 17 percent in November compared to the same month last year.

Federal Construction Minister Klara Geywitz (SPD) recently admitted that the traffic light coalition will miss its target of 400,000 new apartments per year. Due to increased loan interest rates and high construction prices, many developers are holding back on projects or canceling them.

The Central Association of the German Construction Industry (ZDB) expects that around 245,000 apartments will be completed in 2023. On Wednesday, it called, among other things, for a reduction in property transfer tax and an expansion of special depreciation in new social housing construction. The Main Association of the German Construction Industry (HDB) lowered its forecast for housing construction. It now expects that 250,000 apartments will be completed this year, 25,000 fewer than previously expected.

In view of the housing shortage, an alliance of the tenants’ association, the construction union, and social and industry associations recently called for a special fund of 50 billion euros for social housing. There is a shortage of around 700,000 apartments in Germany, they said.