German government set to miss target for new homes this year
Despite a housing shortage around Germany that’s fueling higher prices and rents, the government has yet to meet its annual goal of building 400,000 new properties. It’s also likely to miss the target in 2023 too.
Before it took office in late 2021, Germany’s traffic light government had originally agreed to the target of 400,000 new homes. One quarter of these, or 100,000 apartments, were supposed to be affordable units.
In early December 2022, however, only an estimated 250,000 had been built, with final numbers not expected until May this year. Some regions were particularly slow to add to their affordable housing stock, with expensive Hamburg only having built around 20 new affordable units.
Federal Housing Minister Klara Geywitz now says the 400,000 home target will be achieved in 2024 at the earliest — a full three years after the coalition first took office. Although 2023 has barely started, Geywitz warns the homebuilding target won’t be reached this year either.
Geywitz says her ministry is working to speed up the process with almost 200 new measures, such as digitising approvals and using prefabricated elements for some building.
Higher prices for certain construction materials due to the ongoing war in Ukraine have led many companies to put some projects on hold. Some have stalled due to higher interest rates making financing projects more difficult. Germany’s ongoing skilled worker shortage is also hampering work for construction companies.
The German Federation of Construction Industries (HDB) reckons about 275,000 apartments were built in 2022 - 18,000 fewer than were built in 2021. Its 2023 outlook is even worse, with only 250,000 units forecast. That’s based on a dramatic drop in granted building permits of over 16 percent in November 2022 alone. For most of the year, Germany had recorded a 5.7 percent drop in building permits.
“This puts further pressure on the housing market, especially since we need more immigration to meet German labour needs and we want to provide protection to the many refugees facing war in Ukraine. Politicians must take this more seriously than before,” said HDB head Tim-Oliver Müller. “Affordable living space cannot currently be realised without massive new building subsidies. The costs of materials, financing, and energy are simply too high for that.”