German home building permits tumble amid calls for industry support, ET RealEstate

October 18, 2023

<p>File Photo</p>
File Photo

FRANKFURT: Building permits for apartments in Germany fell 28% during the first eight months of the year, the statistics office said on Wednesday, underscoring a downturn in demand in the construction and real estate industry.

The nosedive in permits comes as German Chancellor Olaf Scholz faces fresh demands to stem a property crisis in Europe’s largest economy.

Building permits for apartments were down an even sharper 31.6% in August from a year earlier, according to the statistics office which attributed the decline to higher building costs and worse financing conditions.

Last month, Germany’s chancellor held a meeting of property industry chiefs and regional leaders. Some attendees told Reuters that support measures announced at the time moved in the right direction but overall fell short.

Wednesday’s data “show that residential construction is in danger of falling off the cliff,” said the president of the German Property Federation, Andreas Mattner.

“Policymakers must walk the talk. Now.”

The nation’s ailing building industry will present the chancellor with a new set of proposed measures this month to cushion the worst property crisis in a generation, Reuters reported last week.

The real estate sector was a bedrock of Germany’s economy for years, accounting for roughly a fifth of output and one in 10 jobs. Fuelled by low interest rates, billions were funnelled into property, which was viewed as stable and safe.

Now a sharp rise in rates has put an end to the run, tipping developers into insolvency as deals freeze and prices fall. The number of people employed in the building sector has begun to drop for the first time in a decade.

Germany aims to build 400,000 apartments a year but is struggling to meet the goal.

Declines for single-family and two-family homes were even sharper, down 38% and 53%.

  • Published On Oct 18, 2023 at 06:00 PM IST

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