It's now becoming very clear that Germany is going to fall well short of its self-imposed target of building 400,000 housing units this year, of which 100,000 were destined to be social or affordable housing units.
In 2021 Germany managed to build about 293,000 units, according to new figures released by the Federal Statistics Office (Destatis), well below the 350,000 planned. This was 4.2% or 13,000 less than in the previous year. The gap between building permits issued for housing units and those actually completed reached 847,000, the highest level since 1996. The arrival of hundreds of thousands of Ukrainian refugees will have added a lot of extra pressure to the housing market
Axel Gedaschko, the president of national housing association GdW, commented on the latest figures: "The significant drop in the number of completed apartments last year is a harbinger of a dramatic slump in housing construction in Germany. As early as 2021, the number of new homes will be nowhere near enough to meet the government's target of 400,000 new homes per year. As a result of supply chain problems, shortages of materials and skilled labor, price explosions and the unspeakable funding chaos surrounding KfW funds, the failure to meet construction targets will be cemented in the future.
"Above all, the socially oriented housing companies need planning security in order to build new affordable, climate-friendly apartment buildings. However, the situation in the construction sector is characterized by great uncertainty and attentism among companies willing to build. To remedy this, the government urgently needs to launch a reliable and adequate subsidy system and an effective raw materials strategy for the sustainable supply of Germany's construction sites."
Gedaschko's organisation has just published the results of a survey of socially-oriented house-builders across Germany, who work closely with local governments to provide affordable housing. A total of 174 housing companies were surveyed between April 24th and 29th this year, a representative cross-sample of the GdW's national membership
Almost two-thirds (64%) of socially oriented housing companies in Germany are having to postpone new construction projects, and almost a quarter (24%) are being forced to abandon planned construction of new multi-family homes altogether. The situation is similarly dramatic for modernization projects: More than two-thirds (67%) of housing companies have to put the climate-friendly and age-appropriate conversion of their apartments on hold, and around 13% have to abandon it altogether.
"Under these catastrophic conditions, the socially oriented housing companies are currently unable to complete even the projects they have already started. Affordable housing construction, the government's targets of 400,000 homes a year and the climate targets for buildings are, as things stand, complete pie-in-the-sky unless something changes very quickly," said GdW president Gedaschko.
The massive price increases currently affect around 58,000 apartments in the construction phase of socially oriented housing companies alone, around 92,000 apartments in the age-appropriate and climate-friendly modernization, and more than 1.5 million apartments currently undergoing maintenance.
"Making calculations for housing construction and modernization has become simply impossible for housing companies. And this is not solely due to the global crisis situations surrounding Corona and the war. in Ukraine. Many problems are home-made," Gedaschko said. "This is a wake-up call to politicians. The government must recognize the dramatic situation in construction and modernization and quickly do something to help."
Associations step up lobbying of government with list of proposals
Several other lobby groups were quick to respond to the official government figures acknowledging the shortfall. Among the leading associations, ZIA Chief Executive Oliver Wittke, IVD National Executive Carolin Hegenbarth and VDIV Managing Director Martin Kaßler emphasized to journalists in a media briefing that the real estate associations are still supporting government targets. To help ease the housing shortage, and provide a number of recommendations as to what to do, they presented a joint paper "Ten steps for 400,000" - a list of measures to drive the push in housing construction.
Wittke of the ZIA said: "The German government has our full support in its goal of creating 400,000 new homes every year during this legislative period. Because the general conditions have once again deteriorated sharply as a result of massive price increases, rising interest rates, the collapse of supply chains, the elimination of the subsidy backdrop and other changes, it is now necessary to provide new impetus. In particular, we are focusing on accelerating and de-bureaucratizing approval procedures. We want even closer cooperation between policymakers and those who build housing. And last but not least, we want a new funding policy that stimulates housing construction."
Carolin Hegebarth of national housing association IVD added: "For the IVD, the clear path is the expansion of supply of housing. We have great potential in the cities to close gaps, increase density, add on to buildings and convert them. These are essentially adjustments that policymakers could adopt to create new living space quickly and efficiently. But this can only be done if we focus more strongly on existing buildings and significantly increase the proportion of building applications for existing measures. This requires simplification of approval procedures and effective investment stimulus for all participants in the housing industry. And that includes private builders and housebuyers, who account for nearly 40% of building applications each year."
And Martin Kaßler, the head of the property management association VDIV called for more clarity on the government funding programmes, which collapsed earlier this year causing chaos among housebuilders. "The specific framework conditions for the 'Climate-friendly construction' program, which will run from 2023, must be defined as early as possible. Building owners and companies now more than ever need reliable framework conditions and long-term planning security, which must be ensured by sufficient testing capacities."
"The expected funding programs need to be communicated at an early stage to ensure planning security for building owners. It should be noted that with higher CO2 savings, the subsidy share also increases."
