Dhe construction and real estate industry is warning of a collapse in German residential construction in view of the high cost of materials and rising interest rates. “All signs indicate that there will be a dramatic slump in 2023,” says an appeal published on Friday by the 17 leading associations and chambers of the construction, planning and real estate industries.
The goal of the traffic light coalition to build 400,000 apartments a year “threatening to become wishful thinking”. In 2021 it was only just under 294,000, and it should be even less in the year that is coming to an end. “The federal government’s measures to counteract this have so far been inadequate, especially since the need will continue to grow in the coming months given the millions of people who are being forced to flee the war in Ukraine,” the associations warn.
Billions demanded for housing
Chancellor Olaf Scholz must therefore make housing construction a top priority. In the case of new construction, subsidies and incentives must close the profitability gap that arises from rising costs. A new building subsidy of ten billion euros is needed at the beginning of the year for affordable housing.
A digital real estate and building cadastre for potential living space and a simplification of land allocation procedures could also help quickly. Awarding and approval procedures should not take more than three months. Tax burdens – such as land transfer tax – should be suspended. They made it unnecessarily difficult for families to form property. The VAT rate for social housing should also be reduced to seven percent.
“If politicians don’t take countermeasures now, we will run into a housing shortage with our eyes wide open,” said Oliver Wittke, general manager of the Central Real Estate Committee (ZIA). “We now need targeted funding for new construction, an acceleration of planning and approval processes, and tax incentives for investments.”
Tim-Oliver Müller, General Manager of the Main Association of the German Construction Industry (HDB), calls for more serial, industrial construction. “This is the only way we can create additional living space quickly, with high quality and at reasonable cost,” said Müller. The federal states would have to harmonize their state building codes. That doesn’t cost a cent extra.