The number of building permits in Germany continued to decline in May as a result of rising interest rates and material costs, writes the German portal Wirtschafts Woche. Specifically, in mid-July, the Federal Statistical Office announced that 23,500 apartments were approved for construction in May, which is a quarter less than the previous year. However, it is encouraging that the decline may be slowing down, as, for example, a decline of 29.6 percent was recorded in March, while in April it was slightly higher at 31.9 percent.
It remains to be seen whether the decline will slow down, but the Ifo Institute assumes that the number of completed apartments will continuously fall to just 200,000 by 2025, of which 175,000 will be new construction. This is much less than the current government set as a goal at the beginning of its mandate – the construction of 400,000 new apartments annually, of which a quarter are social housing. However, this German portal reminds us that experts had previously stated that the goal was indeed overly ambitious given the financing conditions.
Last year, 295,300 apartments were completed. This year, according to the predictions of the German Construction Industry Association, a maximum of 250,000 apartments will be completed, or 275,000, as the Ifo Institute predicts somewhat more optimistically. Next year, also according to Ifo, the number of built apartments will fall to 235,000. Due to the decline in apartment construction, the industrial association ZIA assumes that Germany will lack about 700,000 apartments by 2025.
The Wirtschafts Woche portal cites the words of Ifo Institute expert Ludwig Dorffmeister, who, in addition to the rising costs of projects, cites another reason – reduced state funding, adding: ‘This, along with other long-term problems such as high land prices, excessive bureaucracy, and municipal regulations, has been the last straw that has led to a continued decrease in residential construction activity in the coming years.’
