German housing construction at highest level since 2001

The number of dwellings constructed in Germany in 2019 increased by 2% to 293,000 compared to the previous year, Germany’s Federal Statistical Office (Destatis) announced earlier this month.

"This was a continuation of the positive development observed since 2011," said Destatis. The figure had last been surpassed in 2001, when the number of new dwellings built was 326,000. 

In 2019, the number of apartments in apartment buildings recorded an increase of 6% year-on-year, and the number of newly-constructed semi-detached houses declined, according to Destatis.

However, the number of completed dwellings in 2019 is still well below the government's stated target of 375,000 new dwellings per year. In the German coalition agreement, the Christian Democratic Union (CDU) and Social Democratic Party (SPD) set a target of 1.5 million new apartments by the end of the current government's four-year term in 2021.

Two weeks ago, the German association of independent real estate and housing companies (BFW) noted that Germany's small and medium-sized real estate sector was increasingly affected by the coronavirus pandemic.

According to a BFW survey, among the "biggest problems" for property developers were planning and approving new projects. Four-fifths of property developers in Germany reported that building permits, establishment of planning law and urban land-use planning at municipal level was taking "even longer than usual."

However, the number of issued building permits in Germany last year increased to more than 360,000, and was thus "significantly higher than the number of buildings completed," Destatis said.

That led to a backlog in the number of approved - but not yet completed - dwellings which grew to around 740,000, according to Destatis. In Germany, the construction backlog has been growing since 2008 after hitting an all-time high in 1998. 

However, while the construction industry had been basking in the good times generated by several boom years, and has even been coming through the corona crisis remarkably well, trouble IS brewing as the slump in other sectors slowly works its way through to the building industry. The result is a significant drop in new orders.

At his federation’s recent (digital) annual press conference recently, Peter Hübner, president of the Federation of the German Construction Industry (HDB) said the negative consequences of the pandemic on both private and public-sector clients are now having a clearer impact on the German construction industry. “The corona crisis will leave a long tail”, he said.

After a comparatively good first quarter for the industry, the volume of new orders in April and May probably fell by 30% to 40%. "That is quite enormous", said Hübner, adding that it is difficult to assess what the impact will be on sales for the rest of the year. Exact figures for April, for example, are normally not available till the end of June.

However, the HDB still expects the construction industry to come through the crisis comparatively well, thanks in part to a high order backlog. The association expects construction output to stagnate at the previous year's level, "which would mean a decline of around 3% in real terms," Hübner said.

A quick survey conducted by the Association of German Chambers of Industry and Commerce (DIHK) indicated the situation for smaller construction companies does appear to be easing up. The survey was conducted in early May, mainly among small companies. Those responding with negative sentiment for their businesses fell from 87% to 79% since a previous survey in March. Just under a third of the 574 construction companies surveyed said they were back to pre-crisis levels, while the average for all German industry sectors is only 11% who can say the same thing.