More construction continues in Germany, but the number of new apartments is still not enough to meet demand. The statisticians also register a worrying trend.
FFor the time being, there is no relief in sight for the housing shortage in many German cities. Despite progress, the construction of houses and apartments is only slowly gaining momentum. Almost 285,000 apartments were built last year, as the Federal Statistical Office reported on Thursday in Wiesbaden. That is 2.6 percent more than in 2016 and not as many as at the beginning of the millennium (2002). “The positive development that began in 2011 continued,” said the authority.
But in the opinion of politicians and the construction industry, much more is needed to meet the strong demand for real estate: They estimate 350,000 to 400,000 new apartments a year. However, many projects that have already been approved cannot be built as quickly as the statistics from the statistics also show. The increase in construction is also based on a strong increase in dormitories (plus 16.2 percent), which include refugee accommodation. The number of apartments in multi-family houses (plus 6.7 percent) and two-family houses (plus 5.1 percent) grew significantly more slowly.
There were slight declines in the case of single-family houses and even significant losses (minus 5.5 percent) in the case of apartments that were created by adding storeys to existing buildings. The data are a setback for the federal government, which has set itself the goal of 1.5 million new apartments in this legislative period. That would be 375,000 a year. It is far from that. “Almost 285,000 apartments are a disappointment,” says Michael Voigtländer, real estate expert at the Institut der Deutschen Wirtschaft (IW). Like many industry experts, he had expected the new building to exceed at least 300,000 apartments in 2017 for the first time in a long time.
The construction industry is reaching its limits in the real estate boom
In order to dampen the housing shortage, the federal government wants, according to the coalition agreement, to support social housing construction with two billion euros. In addition, families receive Baukindergeld when buying property – 1200 euros per year and child for up to ten years. However, the bottleneck for residential construction is not a lack of money. In fact, far more apartments are approved than can be built in a hurry. The overhang increased further in 2017 to a good 653,000 apartments – the highest level since 1999. The traffic jam increased again, although the number of building permits had fallen by more than 7 percent last year.
“A lack of building land is the bottleneck,” says IW expert Voigtländer. Politicians should better support cities in developing new residential areas, for example through subway connections. The construction industry also strikes this notch. “The scarce building land is slowing down residential construction in the cities,” criticized Peter Huebner, President of the Main Association of the German Construction Industry (HDB), recently.
However, the sector is also reaching its limits in the real estate boom. Construction companies and craftsmen can hardly keep up with the flood of orders. The construction industry booked an order backlog of 41 billion euros – that’s enough for four months of production. And the overhang for apartments that have not yet been built is more than can be built within a year. At the same time, building materials are becoming more expensive and skilled workers are becoming scarcer.
The construction industry, which expects record sales of 120 billion euros in 2018, is at least expecting significantly more residential construction this year. According to HDB President Huebner, up to 340,000 apartments could be built. The Federal Association of Independent Real Estate and Housing Companies (BFW) is less confident in the medium term. Because the completions followed the declining housing permits with a delay. “The increase is likely to be short-lived,” said President Andreas Ibel. The high requirements, such as energy saving, which make building complex and expensive, remain an obstacle. And according to the KfW development bank, speculators also play a role. Investors, especially in large cities, were getting building permits in advance, but did not implement projects – in the hope of rising prices.