The number of building permits is decreasing, demand is increasing. Representatives of the construction sector therefore warn of an acute housing shortage and are concerned about orders. They call for emergency measures.
The construction sector is sounding the alarm: anyone looking for an apartment must be prepared for rental and purchase prices to continue to rise. Compared to 2019, the number of newly approved apartments and houses this year is expected to be more than halved to just 32,600 (see graph below).
New building collapsed
By 2025, that number is expected to be fewer than 30,000. Increased construction costs, high interest rates and strict private lending guidelines have reduced new construction by 30 to 50 percent. At the same time, the population is growing by about 100,000 people per year. An initiative by the construction sector and the building materials sector is therefore calling for emergency measures from politicians.
In concrete terms, the states should reuse the housing subsidies (1.9 billion euros) for new construction. If the money is earmarked, it could be used to re-create housing instead of restructuring state budgets. The federal government should add another 500 million euros to state housing subsidies.
Call for more flexible credit rules
In addition, credit rules should be relaxed. The upper limit for the monthly loan payment should be 60 percent of income instead of 40 percent. In addition, the introduction of an interest-free loan to achieve the equity ratio is encouraged. Currently, prospective homeowners need at least 20 percent of the total costs in the form of equity to purchase their home in order to obtain a loan for the remaining 80 percent.
The housing initiative also calls for a “radical simplification of construction subsidies and the removal of bureaucratic hurdles” to boost construction activity. For example, there is a need for uniform advice on the various sources of financing for construction and renovation.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
