Home-building hits 20-year high, demands rise for affordable housing

The German construction industry completed more apartment units in the COVID year of 2020 than in any year since 2001, according to Germany's Federal Statistics Office in new figures just released. The number of finished units rose 4.6% over the previous year to 306,376.

The number of apartment completions has been rising steadily since 2011, albeit falling below the government targets of 375,000 new units per year, and the overall target of 1.5 million units that the ruling CDU/CSU/SPD grand coalition had set for this legislative period. Both government and the building industry are agreed that annually between 350,000 and 400,000 apartment units need to be built annually to help tackle the housing shortage in the country.

Not surprisingly, critical voices didn't lose time in responding to the figures. The national chairman of industrial union Bauen-Agrar-Umwelt (IG Bau), Robert Feiger, described the federal government's housing offensive as a failure. "The new federal government will have to start in autumn where this federal government left off its housing construction policy: By 2025, 1.5 million new flats must be built in Germany - especially social housing and affordable housing." 

Nationwide, 12.7 million households are dependent on housing in the lower or middle price segment. Feiger called for a master plan for "social housing" to be a major priority of the incoming new government.

Of the apartment units built last year, multi-family housing made up 153,377 of the completed units, up 7.2% on the previous year. The number of newly-built single-family houses rose by 4.1% to 87,275 buildings, while two-family houses increased by 6.0% to 20,472 completions.

The number of completions last year could have been higher, given that 779,432 units were approved but not completed, for a variety of reasons including including a shortage of skilled labour and - increasingly - a serious shortage of building materials. This 'building overhang' as a phenomenon has, however, been growing for years.

Still, there was a new mood of determination at the Wohnungsbau-Tag, which took place virtually in Berlin earlier this month, and an acknowledgement that we've seen all we can expect from this current government in this legislation period. September's elections are almost certain to usher in a new era - one in which the Greens are likely to playing a much more significant role - and hence the various factions are lining up their demands for the new regime.

Lukas Siebenkotten, head of the German tenants' association Deutscher Mieterbund, is demanding at least 80,000 new social housing units, mostly at subsidised prices for lower-earning tenants. Like Feiger of IG Bau, Siebenkotten is focused on the 12.7 million households in the lower-price segment - who make up 56% of tenant households, and 22.8m people.

One of the big obstacles to new construction is the shortage of zoned building land, which has risen in price by 45% over the past six years, as against total consumer price inflation in the period of 6.9%. A new joint initiative of various housing associations, called "Akutplan 2025", feels that even the new "Baulandmobilisierungsgesetz" - a new law passed by the Bundestag on May 7th to grant more rights to municipalities in buying available building land for social housing - falls way short of what's required and actually hinders the creation of new housing.

A new study, "Neue Wohnkonzepte fürs Umland von Großstädten", published by the Deutsche Institut für Urbanistik (Difu), tries to demonstrate how more concentrated building in the suburbs instead of in the big cities themselves can help resolve the housing shortage.

According to the authors of the study, new construction in suburban areas must have a specific relationship to the city centre itself, and take up and further develop local urban qualities. "Relief housing construction in the surrounding areas differs from classic suburbanisation in that it does not involve the construction of more detached and semi-detached houses," the study states. Mono-functional "dormitory settlements" are not the solution; rather, appropriate densities and diverse housing offers for different target groups must be created and embedded in qualified open spaces, it concludes. Plenty of new challenges ahead, then.