The real estate sector calls for curtailing "excessive regulatory burdens."
Rewritten Article:
In the year 2025, Germany might be faced with a deficit of around 150,000 apartments. Major cities are reportedly grappling with this issue, reaching alarming proportions as per experts. Responding to this crisis, the Central Real Estate Committee (ZIA) emphasizes the necessity for a breakthrough in residential construction. They advise the new federal government to untangle the regulatory knots in the construction industry, providing funds and guarantees through KfW development bank to stimulate stagnant new construction and renovation projects.
ZIA President Iris Schoberl anticipates only 210,000 new apartments to receive approval in 2024, a 45% decrease from the year prior. In 2023, roughly 260,000 apartments were completed, while the figure is expected to drop to just 230,000 in 2024. To meet the annual demand of more than 372,000 new apartments, particularly in major cities like Berlin, Munich, Hamburg, Frankfurt am Main, Cologne, Düsseldorf, and Stuttgart, the housing shortage is staggering.
Affordability issues contribute to high demand for rental apartments, leading to unchecked rent increases. According to the report, average rents nationwide rose by 2.1% in December compared to the year prior. This peaked significantly in major cities, with Berlin seeing a 8.5% increase, Frankfurt a 8.0% increase, and Hamburg a 5.4% increase.
Real estate expert Ralph Henger from the Institute of the German Economy (IW) pinpoints municipalities as key players in residential construction. He suggests they accelerate planning and approval processes through digitalization, bureaucracy reduction, and hiring additional building authority staff. Construction costs in residential construction need to decline, but standards ought not to be further tightened, as per Henger.
The ZIA, serving as the apex body of the real estate industry, boasts a membership of over 30 associations and approximately 37,000 companies.
In essence, to address the housing shortage in major German cities, the ZIA proposes implementing several strategic measures. These include encouraging digitization for streamlined planning and approval processes, reducing regulatory hurdles, lowering construction costs, incentivizing investments through funding programs and revised tax regulations, and dedicated resources for afford-able housing development.
The economy of Germany might be impacted significantly due to the housing shortage, as the demand for new apartments exceeds the supply by a wide margin. The deficit of approximately 150,000 apartments in 2025 could negatively affect various sectors, including construction and real estate.
Addressing the regulatory knots in the construction industry, as suggested by ZIA, could stimulate new construction and renovation projects, potentially boosting the overall economy.