Building plots: Housing construction in Germany is in a deep crisis. Picture Alliance
Germany’s housing sector is in a deep crisis. Although many apartments are missing, at most half of the targeted 400,000 apartments will be built this year.
Two highlights of the problems: The financial intermediary Interhyp has identified reasons why families say goodbye to their dream of owning their own home.
And Germany’s largest real estate company Vonovia gives the reasons why it is holding back the construction of 60,000 apartments.
The housing market in Germany is in a dramatic crisis. Because there is a lack of apartments, rents and purchase prices are rising. At the same time, housing construction has plummeted. Instead of the desired 400,000 apartments, only half are likely to be built this year. The trend is downwards, because the Building permits decline sharply, orders that have already been placed are canceled. In general, high construction costs, increased interest rates and government intervention are considered the most important reasons for the crisis. But what exactly do the problems look like? Two highlights:
Vonovia is holding back the construction of 60,000 apartments
According to its own information, Germany’s largest real estate group Vonovia is currently holding back the construction of 60,000 apartments. Vonovia cites high interest rates and construction costs as the reason. “We have plans for a total of 60,000 apartments in the drawer,” said CEO Rolf Buch to the newspapers of the Funke media group (Wednesday). “We get everything ready up to the building regulations. And we hope that building will soon be worthwhile and profitable again. Then we want to build again immediately.”
The construction costs used to be 3,000 euros per square meter, but today they are 5,000 euros, added a company spokeswoman. “Our average rent in the existing property is around 7.50 euros, and many people with medium or low incomes live here. That’s why we also pay attention to affordable rents of around 10 to 12 euros for new buildings.” The high construction and financing costs would therefore lead to a rent of 20 euros per square meter in a new building. “But many people can no longer afford that,” it said.
From the perspective of Vonovia boss Buch, there is currently a shortage of more than a million apartments in Germany. “My estimate is: We need 700,000 apartments a year, also because of increasing immigration.” So the problem is not one million apartments, but several million apartments that are missing in a very short period of time.
The IG BAU union reacted indignantly and accused Vonovia of wanting to put pressure on politicians by stopping construction. The construction union demanded that they should not put up with this and called for the company to be partially nationalized. It is high time for the federal government to get involved with Vonovia. This gives the state influence on the corporate strategy.
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That’s why families bury their dream of owning their own home
The real estate financier Interhyp gave reasons why private developers are currently not building and many families are even burying their dream of owning a home. “There is huge uncertainty,” said Interhyp board member Mirjam Mohr on Wednesday. “We often hear: Building interest rates have quadrupled (…) I think my dream of owning my own home is completely over,” reported the manager at the presentation of the company’s “dream living space study”.
“The second strand is often: The heating law has unsettled me, I don’t know what I have to do, what I’m allowed to do, what it costs.” The main source of the analysis was a representative survey of a good 2,000 participants in May and in July by the Rheingold survey institute and customer discussions by Interhyp.
A large majority of interested parties cannot currently afford their own property. “84 percent of those surveyed find the market to be rather narrow and difficult and do not see any opportunities for themselves in the market,” said Mohr. The reasons are not just high real estate prices and the rise in interest rates. The Building Energy Act is mentioned very often.
ro/DPA
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