Increase in Building Authorizations Recorded during Q1 - Increased approval of building permits during the initial three months
Ramped-Up Building Permits in Q1
Get ready to see more cranes in the sky as the number of building permits for single-family homes skyrocketed by 15.3%, climbing to a whopping 10,600 in the first quarter. Contrastingly, the number of approved two-family homes took a hit, dipping by nearly 9% to around 3,000. The number of multi-family homes held steady at a robust 28,800 apartments. But here's the twist; permits were also granted for additional apartments within existing buildings.
Sebastian Dullien, the scientific director of the Institute for Macroeconomics and Business Cycle Research (IMK) of the Hans-Böckler-Foundation, thinks these numbers are the "first signs of an economic recovery" and that the downturn in residential construction might have borne its fruits.
Felix Pakleppa, CEO of the Central Association of German Craftsmen, wasn't quite ready to pop the champagne. "This isn't a rebound yet," he stated, adding that Germany still has a long way to go, with the first quarter of 2021 and 2022 seeing over 90,000 apartments approved. For long-term demands significantly surpassing 300,000 apartments per year, we're still far off the mark, Pakleppa explained, particularly in urban centers. The new federal government needs to act swiftly to set the stage for better building conditions.
Tim-Oliver Müller, CEO of the Building Materials Industry Association, echoed Pakleppa's sentiment, urging the implementation of the housing package agreed upon in the coalition agreement. "We have to build, build, build," Müller stressed.
Verena Hubertz, the new Federal Minister of Housing (SPD), promised an "aggressive pace" in residential construction during her government program presentation in the Bundestag. Hubertz plans to submit a bill for a "housing construction turbo" within the first 100 days of the government, aiming to speed up the building process. Hubertz referred to the proposed introduction of paragraph 246e in the Building Code: It's the "sledgehammer" we need to simplify and expedite housing construction in tense housing markets.
Stefanie Hubig, the new Federal Minister of Justice and Consumer Protection (SPD), announced in the Bundestag that she will move quickly to extend the rent cap. Building materials industry CEO Müller pointed out that the rent cap merely caps rents for current renters. It fails to create an investment incentive for new housing construction, something Müller emphasized is crucial for generating new living spaces.
Long story short: we're seeing a surge in building permits, but we still have a long way to go to meet the estimated 400,000 long-term annual demand for apartments in Germany[5]. Despite substantial public investment and a commitment to meeting this demand, economic factors like rising construction costs and uncertainty have hindered progress recently. demands, particularly in urban centers, are on the rise, propelling projected housing price increases of around 3.0% in 2025[1].
- The surge in building permits, coupled with the promise of an aggressive pace in residential construction by the new Federal Minister of Housing, indicates a need for community aid and investment in the real-estate sector to help meet the long-term demand for apartments in Germany.
- As the number of building permits for new apartments continues to climb, it's crucial for the new federal government to act swiftly and address rising construction costs and uncertainty to create an investment incentive, thus generating new living spaces and supporting the business and finance aspects of the real-estate industry.
