Home » Real estate: High building interest rates are more of a “psychological problem” – Scholz’s sentence causes outrage

Real estate: High building interest rates are more of a “psychological problem” – Scholz’s sentence causes outrage

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Real estate: High building interest rates are more of a “psychological problem” – Scholz’s sentence causes outrage

Economy appearance at citizen dialogue

High building interest rates are more of a “psychological problem” – Scholz’s sentence causes outrage

Status: 15.02.2024 | Reading time: 3 minutes

Chancellor Olaf Scholz (SPD) in his constituency

Source: picture alliance/dpa/Carsten Koall

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The government is clearly missing its target of 400,000 new apartments built per year. As an explanation, Scholz presented an idiosyncratic assessment at a citizens’ dialogue. The clear response from the real estate industry followed promptly.

The Brandenburg town of Stahnsdorf is probably known to a few nationally because it is located in Berlin’s suburbs, between Teltow and Potsdam, directly adjacent to the Wannsee district of the capital. As an early property of the Bishop of Brandenburg, Stahnsdorf is almost as old as Berlin itself, based on the first documented mention. But most people probably don’t even know that it is in the constituency of Chancellor Olaf Scholz (SPD) – Potsdam/Potsdam Mittelmark II/Teltow-Fläming II.

In the real estate industry, however, the town of 16,000 inhabitants on the Teltower Höhe suddenly appeared on the nationwide map on Wednesday (February 7, 2024). Chancellor Scholz spoke in a citizens’ dialogue in front of a home audience about the world situation, about democracy and refugee policy – and about new housing construction, which some Stahnsdorf residents are likely to view with suspicion given the overflowing capital next door.

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Scholz emphasized that the federal government’s target of 400,000 new apartments per year – which has so far been missed – is more of the “lower limit” of what is necessary. The municipalities would have to help in the effort to build more apartments. “The topic concerns me,” he said. And then the decisive sentence was spoken, and some real estate professionals’ jaws dropped afterwards.

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The reason for the lack of new construction is, among other things, “a psychological problem caused by a rapid rise in interest rates in recent years” – press agencies quoted the head of government as saying. The reason for the reluctance to buy is not the actually skyrocketing financing costs – for a home at the average price it costs several hundred euros per month – but rather a form of paralysis by fear?

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At the Federal Association of German Housing and Real Estate Companies GdW, the mood barometer immediately jumped into the red zone. “The Federal Chancellor’s statements about his own failure to meet the new construction target can only be described as astonishing,” said GdW President Axel Gedaschko.

“Affordable rents are no longer possible due to the increased interest rates in conjunction with the sharp increase in construction costs in new buildings. This is not a psychological problem, but a fact that the government should take note of.” And in general, “statements on psychological problems should be left to professionals.”

“Costs for housing construction are completely out of control”

Around 3,000 housing companies nationwide are organized at GdW, including the listed Vonovia, but above all also many municipal and cooperative players with a total of around six million apartments. They are finding it difficult to cope with the sharp rise in property prices during the low interest rate period, with the material costs, which have been extremely high since the Corona pandemic, and at the same time with the inflation-related loss of purchasing power of their typical tenant clientele. “We have been pointing out for months and now years that the costs and framework conditions for housing construction are completely out of control,” said Gedaschko.

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It has only been clear for a few weeks that there will be a new, broad-based funding program for new residential construction – even for new buildings that do not meet the strictest efficiency standards. The development bank KfW is supposed to grant low-interest loans, “but it is not yet clear when it will come into force – and overall it will not be sufficient to meet the demand for affordable housing, especially for the middle of society,” says the head of the association.

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However, there is likely to be agreement with the Federal Chancellor on one matter. He also said in Stahnsdorf that bureaucratic regulations were “a problem”. Federal Construction Minister Klara Geywitz (SPD) is working on this. But it is also crucial: “There cannot be more apartments without more building land, not without more density,” said Scholz. The cities and municipalities would have to act.

The building minister is planning an acceleration paragraph in the building code so that more building land can be freed up on the outskirts of the city. But there is also protest against this. By architects. And from the German Association of Cities.

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