According to credit insurer Atradius, the ongoing debate over the socialisation of large housing portfolios in Berlin is exacerbating risks for the regional construction and property market. Deliberations based on the 2021 referendum to transfer large portfolios of residential property into public ownership are causing noticeable restraint among investors and project participants. In the view of David Engelhardt, Manager Risk Services at Atradius, a change of ownership does not solve the structural housing shortage, as no additional living space is created. Nor does this step alter Germany's home ownership rate, which is low by European comparison.
For the already weakened housebuilding sector, political uncertainty represents an additional burden. When property rights and long-term investment security are called into question, market participants react with caution. This threatens to further exacerbate the strained financing environment and widens the deficit in urgently needed new construction.
Declining completions and growing construction backlog
The situation hits the construction sector in the midst of a deep crisis. Although 238,500 building permits were issued nationwide in 2025, the number of actual completions fell to 206,600 units, the lowest level since 2012. A further decline to around 185,000 homes is anticipated for the current year, meaning the Federal Government's target of 400,000 new builds annually will once again be missed by a wide margin. At the same time, the average duration from planning approval to completion has lengthened by around seven months since 2020 to roughly 27 months. At the end of 2025, the backlog of approved but not yet completed dwellings stood at approximately 760,700 units.
- —Sharp increases in construction costs and interest rates as primary obstacles
- —Persistent shortage of skilled labour and noticeably longer planning periods
- —Bureaucratic hurdles, complex approval procedures and demanding building standards
Heightened default risks along the supply chain
Against this backdrop, the credit insurer calls for more reliable framework conditions and a streamlining of construction processes. Due to more restrictive lending and faltering construction activity, Atradius is currently examining receivables from construction firms, trade contractors and suppliers with increased caution. At the same time, the company is recording sustained high demand for surety bonds and guarantee insurance to protect operational liquidity and replace contractual retention monies.
David Engelhardt warns that the controversy in Berlin could cause lasting damage to confidence in the business location. A stable legal framework provides the foundation for private investment. Without this backing, the risks of project delays, payment defaults and insolvencies across the supply chain rise. Atradius is already recording a significant increase in claim values from construction-related insolvencies, pointing to growing economic strain even among larger market participants.
