How much to blame do the municipalities bear for the housing shortage?

Almost half a million new apartments are missing in Germany. The real estate industry is now criticizing the municipalities for not making sufficient use of existing instruments.

Cranes are on a construction site for residential buildings in Hamburg.

Dhe real estate industry accuses municipalities of not making enough use of funds for fast and inexpensive construction. In the fight against rising rents in large cities, the state is not doing enough, criticizes the Central Real Estate Committee (ZIA). Construction has become steadily more expensive in recent years, said ZIA President Andreas Mattner. “The political requirements have increased, land prices are also at an all-time high, and costs for building materials and trades are rising constantly.”

There are many instruments such as digital planning, concept assignments for properties or serial cross-border construction. “These offers are used by too few municipalities,” complained Mattner. “There is considerable potential here.”

Delays and costs

The association, which represents more than 25 associations in the real estate industry, refers to its own survey of 5,000 respondents. Accordingly, more than 80 percent of German citizens see rising construction and land costs as the main reason for the rent increases in metropolises. Only the generally low supply of housing is made even more responsible for the increasingly expensive housing in large cities (86.9 percent), according to the paper.

The ZIA criticizes the existence of various state building codes, which caused delays and costs. Once approved, building types should be applicable in all federal states in order to be able to build quickly in series. “In order to advance serial construction, there needs to be a binding specification of certain technical requirements in a federal building code,” the association demands. In residential construction in particular, this would “free up urgently needed planning and construction capacities”.

In addition, the association advocates awarding of concepts. Municipalities forego the maximum possible price when awarding land and decide on the quality of the proposal submitted by project developers – such as ecological and energy-efficient criteria or ideas for social mixed residential areas.

Overloaded municipalities

Construction costs in Germany have been rising for some time. In 2017, the prices for new buildings and renovations climbed by more than three percent, according to the consulting firm EY Parthenon – significantly more than inflation. An end is not in sight, as the prices for materials such as cement have climbed and personnel are also becoming more expensive. A shortage of craftsmen, especially for master craftsmen, is also slowing the building boom, wrote the KfW development bank recently. There are now 653,000 approved apartments that have not yet been built.

In the opinion of the government and the real estate industry, 350,000 to 400,000 new apartments are needed per year to remedy the housing shortage in Germany. In 2017, however, only just under 285,000 were finished. There are still no signs of a turnaround in building permits.

ZIA President Mattner criticizes that a lot of staff has been cut in the building authorities in recent years. Many municipalities are overloaded with the challenges of the real estate boom.