One year after the so-called construction turbo came into force, the BFW Federal Association of Independent Real Estate and Housing Companies has drawn a sobering conclusion. The hoped-for revival of new residential construction has so far failed to materialise. According to the peak industry body, the relaxations introduced fall short in practice, as they do not eliminate the structural obstacles of the current market crisis.
BFW President Dirk Salewski emphasised in Berlin that the initiative is still running at low revs. Not every local authority is making use of the new options. The designation as a construction turbo is also an overstatement: while the instrument can speed up procedures and lead to permits more quickly, it does not trigger the actual building activity on its own.
Structural obstacles weigh on the construction industry
The construction and real estate industry faces an extraordinarily difficult overall situation. High construction costs and significantly increased financing interest rates coincide with persistently high energy prices and demanding regulatory requirements. As a result, end prices have risen, while demand for new builds has collapsed almost entirely. A short-term improvement in this constellation is currently not in sight.
The effects on broad sections of the population are particularly severe. According to the association's president, employees and families are currently largely sidelined when it comes to acquiring home ownership. Only households with substantial financial reserves are still able to carry out building projects at present. In order to counteract the downward trend, isolated procedural acceleration is insufficient.
Call for tax relief and reliable framework conditions
The BFW advocates a three-pronged approach consisting of building code simplifications, planning acceleration and systematic cost reductions. Only the interplay of these factors could allow affordable living space to be created once again. To revive new construction activity, the association proposes a targeted package of state measures:
- —Reduction of VAT on construction services
- —Introduction of more attractive subsidy programmes and tax depreciation options
- —Complete waiver of property transfer tax for the initial purchase of owner-occupied residential property
- —Legally secure establishment of building type E to reduce cost-intensive standards
According to Salewski, additional uncertainty is created by the debate over expropriations in Berlin, which further dampens the prospects of a market recovery. The provision of housing remains fundamentally reliant on private capital; however, investments only take place where reliable framework conditions and the protection of property are guaranteed.
