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East's real estate sector: demolition becomes seemingly unavoidable

Spacious living options ahead: Real estate expert Frank Emrich foresees an oversupply of approximately 500,000 dwellings in Thuringia, Saxony, and Saxony-Anhalt, bucking the trend of ongoing housing shortages in smaller cities.

In the face of ongoing housing shortages across smaller cities, real estate expert Frank Emrich...
In the face of ongoing housing shortages across smaller cities, real estate expert Frank Emrich anticipates an oversupply of approximately 500,000 dwellings in the regions of Thuringia, Saxony, and Saxony-Anhalt.

East's real estate sector: demolition becomes seemingly unavoidable

Revamped Article:

Central German Housing Dilemma: Balancing Surplus and Shortage

Germany's housing market presents scattered challenges, especially in the states of Thuringia, Saxony, and Saxony-Anhalt, where over half a million apartments may potentially stand empty in the foreseeable future. Yet, this claim might raise eyebrows when considering the tight housing market in small towns like Erfurt, Halle, or Meiningen. But is it an alarmist prediction?

As it stands, Thuringia alone harbors approximately 20,000 vacant apartments, primarily in rural areas, which the population decline is set to magnify drastically. It's not about Erfurt, Weimar, or Jena—Thuringia is notorious for its abundant rural territories. Consequently, the half-million-apartment prediction might indeed become the disheartening reality.

Interestingly, apartment seekers in even smaller towns like Sonneberg or Altenburg are frequently expressing disappointment over locating suitable, reasonably-priced accommodations. This dissatisfaction can be linked to an unfortunate trend of excluding older, substandard apartments that are often vestiges of the GDR era, predominantly constructed between the 1970s and 1980s. These apartments, while affordable, are often small, lack lifts, and provide no balcony or privacy, compelling many seekers to aim for newer apartments—with correspondingly higher prices. The disparity between existing, affordable options and modern apartments is too vast for many.

The underlying hitch lies in the overlapping structural issues: an abundance of unwanted housing and a population shrinkage averaged toward the older population who prefer specific housing types.

To chop through these complex matters, we're dealing with more than just a single problem. However, finding a solution won't be a walk in the park.

The employment market's experiences suggest that some structural problems will endure without a definitive fix. In fact, Thuringia alone has over tens of thousands of jobless individuals despite chronic labor shortages across all positions and numerous support programs in place. It seems that the housing market may follow suit, with vacancies plaguing certain apartments while other seekers remain apartmentless. A structural deficit between supply and demand appears imminent, with regional population projections indicating an inescapable trend of shrinking.

Demolition—or more politely, disposal—offers a possible solution.

Taking a cue from Thuringia's history, the state has already demolished about 40,000 apartments since the turn of the millennium. By the early 2030s, it's projected that another 10,000 must meet the same fate, with more demolitions likely as the surplus grows to half a million by 2045. Population forecasts for Thuringia, Saxony, and Saxony-Anhalt are clear—we can't curb the shrinking trend.

So, apartment demolitions will escalate significantly in the near future. But it's not just large-scale housing associations that will see the negative repercussions.

Many single and two-family houses in rural areas will be impacted by this phenomenon, placing immense pressure on villages and small towns. By the 1990s and 2000s, the periphery of these regions had been resettled through new construction, while several village centers began to decline and are now basically ghost towns. Even the marginal regions will soon face further dwindling by 2045, as many who migrated there three decades ago reach retirement age and move to cities for better healthcare, amenities, and even bus services.

However, such demolition comes at a loss for housing associations—these properties represent part of their investments that should ideally generate income.

While demolition undeniably translates to financial loss for housing associations, the cost of maintaining empty apartments also needs consideration. Landlords bear expenses related to traffic safety, utilities, and outside upkeep even for vacant apartments, expenses that significantly burden small firms with high vacancy rates. Consequently, demolition—though painful—is often necessary.

Let's turn our attention to the tenants in Thuringia.

An increasing segment of the elderly population longs for barrier-free housing accommodations. Meeting this demand in the coming years will be crucial but challenging, considering the required renovations' complexity and associated expenses. As a quick fix, we need smart, cautious renovations of existing properties, aiming to reduce, rather than eradicate, barriers. However, such renovations—particularly those meeting the DIN 18040 standard for barrier-free housing—rarely prove practical in existing apartments due to their structural quirks. When we discuss age-appropriate renovation, we're not talking about fully barrier-free housing, but rather barrier-reduced modifications, ideally integrated into core apartment renovations.

Financial assistance will play an essential role in this transformation.

The state had a successful program funding barrier-reduced renovations in the past, but it has since been halted. If reinstated, such a program could propel hundreds of elevators. Sufficient funding remains crucial for affording the high costs associated with renovating apartments to meet the aging population's needs without inflating rental prices.

Frank Emrich stands as the voice for 190 housing corporations owning 265,000 apartments in Thuringia, acting as the association's director.

Even with financing, will there be adequate age-appropriate housing available in the future?

It's only partially true that there will be age-appropriate housing for every senior. Yet, demand extends beyond the requirement for age-appropriate apartments. For example, there already exists a significant demand for apartments where housing corporations, alongside the social economy, offer specific assistance services to elderly residents, like grocery shopping. Such accommodations come with a service fee and are in high demand, but remain in short supply.

Expanding such offers could potentially open new business avenues for housing corporations, if partnerships can be formed.

It's not always straightforward to establish collaborations necessary for these services. Yet, they can bolster the core business model—providing people with apartments while ensuring their continued residence for an extended period. This approach advantages all parties: the corporations, residents, and society alike.

Lastly, what options do today's apartment hunters in rural towns have?

Those seeking affordable accommodations in rural towns should cast a diverse net. In addition to consulting popular internet portals, it's beneficial to visit local municipal or cooperative companies' websites and consider contacting service offices. Moreover, intensively studying ancillary costs is crucial. We frequently see advertisements misrepresenting actual costs—a practice that is becoming increasingly unacceptable as ancillary costs become an ever-growing portion of household expenditures.

  1. In the face of an abundant rural housing supply and a shrinking population, finding suitable and affordable housing becomes challenging for apartment seekers in Thuringia, leading to increased investments in newer apartments with higher prices.
  2. With an imminent structural deficit between the supply and demand in the housing market, financial assistance and strategic renovations of existing properties will be essential to provide age-appropriate and barrier-free housing for the growing elderly population in Thuringia.

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