Real Estate Facts: Germany's Housing Crisis is getting worse

Germany's housing crisis deepens as construction activity continues to decline. The Federal Statistics Office has reported that new orders for construction projects fell by 29% year-on-year, exacerbating the housing shortage in the country. The drop in construction activity reflects a 15.4% year-on-year decline in new orders across the industry. The country's rising interest rates and material costs are among the reasons for the decline in new permits for building. Only 22,300 new houses were approved for construction in February, a 20.6% drop from the same period last year.

The drop in construction activity is particularly concerning, as Germany missed its target of building 400,000 new homes a year in 2022. Moreover, the country has been grappling with a record number of immigrants, especially those from Ukraine, exacerbating the already existing housing shortage in the nation. According to official figures, more than 1.4 million people migrated to the country last year, raising the population to an all-time high of 84.3 million.

The housing shortage has created an affordability crisis, with soaring rents and limited supply. This crisis is especially acute in urban areas, where demand is most significant. It has become increasingly difficult for people to find affordable houses, and the situation is impacting the economy adversely. The housing crisis stymies job growth, deters businesses from moving to major cities and can impede social mobility.

To solve the housing crisis, Germany must increase the number of new houses built, streamline the construction permit process, and invest in affordable housing solutions. Additionally, the government must look at ways to incentivize developers and construction companies to build more houses and encourage public-private partnerships. With an effective housing policy, Germany can tackle the housing crisis and improve the overall quality of life for its citizens.