The Federal Statistical Office (destatis) has published current building permit figures which, at first glance, signal a positive development in residential construction. In May, 21,000 dwellings were approved for new builds and existing stock. This represents an increase of 24.7 per cent compared to the same month last year. This figure appears to indicate a stabilisation after a period of declining approvals.
However, the German Real Estate Association (IVD) qualifies these statistics. IVD President Dirk Wohltorf commented that despite the increase in approvals, it is not possible to speak of a genuine recovery in the residential construction sector. He described the suggested upswing as purely theoretical and pointed to a continued deterioration in sentiment within the construction industry. The current ifo business climate in residential construction documents declining expectations and a lack of orders, indicating a discrepancy between approvals and actual construction activity.
Challenges and Planning Uncertainty
According to the IVD's assessment, a new low in the number of actually completed dwellings is expected this year. A key reason for this is the increasing gap between granted building permits and their implementation in construction projects. Many permits are not realised because investors and private builders lack reliable political framework conditions. State regulations and tax burdens make numerous residential construction projects economically unattractive.
Discussions, such as those concerning a potential socialisation of housing stock, negatively impact investment confidence. It is emphasised that investments in residential construction require long-term planning security. In this regard, the Building Modernisation Act was also criticised, as it fails to provide comprehensive clarity regarding the legal requirements for building energy supply beyond 2030. The resulting additional financial burdens for landlords further dampen market sentiment.
Call for Political Impulses
To initiate a turnaround, the IVD calls for a powerful impulse through concerted action by the federal and state governments. The “Pact for Home Ownership” announced by Construction Minister Verena Hubertz for 19 June in Frankfurt am Main is cited as a promising initiative. This pact must now be concretised to unleash its effect. One measure could be the abolition of the real estate transfer tax on the purchase of owner-occupied homes.
- —21,000 dwellings approved in May, up 24.7 per cent compared to the previous year.
- —Critical assessment by the IVD: upswing remains purely theoretical.
- —Declining expectations and orders in the ifo business climate for residential construction.
- —Call for a “Pact for Home Ownership” and tax relief.
Such measures to improve opportunities for home ownership could comprehensively stimulate residential construction and thus contribute to easing the strained market situation.
