Real estate experts expect a further decline in new residential construction in Germany as building permits for dwellings slumped 20.6% year-on-year in February, the Federal Statistical Office (Destatis) reported on Tuesday.
According to the latest numbers, a total of 22,300 building permits for dwellings were issued in February, representing a decrease of 5,800 permits compared to the same period last year. The number of construction permits has been steadily declining since last May and has fallen by 10% each month from October 2022, Destatis said.
In its spring report, the German Property Federation (ZIA) said that housing shortages are likely to have reached their highest level in 20 years and that the gap between supply and demand may widen to 700,000 buildings by 2025.
Industry experts blame the aftermath of the pandemic, coupled with material shortages and surging energy and building materials prices for the unfolding crisis. According to ZIA’s president, Andreas Mattner, the country is already experiencing a dire lack of housing and that a “very bad awakening” is on the horizon for Europe’s largest economy.
Another survey by the German Economic Institute (IW) said that more than half of German construction companies expected a decline in output this year while only 15% believe business will expand.
The building industry had warned last year of a dramatic decline in residential construction. In 2022, about 280,000 apartments were completed, while it is expected that about 245,000 will be finished this year.
The president of the Federation of the German Construction Industry (HDB), Peter Huebner, confirmed that high materials prices and soaring mortgage rates are making residential construction increasingly difficult.
In January, German Housing Minister Klara Geywitz admitted that the government’s building target of 400,000 apartments per year would be missed in 2023.
According to ZIA estimates, 1.4 million people will be looking for a place to live in 2024 and will not be able to find one “if we don’t turn things around immediately.”
This article was originally published by RT.
