Rising material prices, rising interest rates, rising energy costs: the housing industry is warning that the construction of affordable apartments is hardly possible under the current circumstances.

According to a study by the General Association of the Housing Industry (GdW) presented on Thursday, construction prices for residential buildings in the first quarter of this year were 14.3 percent higher than in the first quarter of 2021.

Julia Loehr

Business correspondent in Berlin.

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Compared to 2019, construction prices have even increased by 21.8 percent.

The increase in costs is also driving up the rents that would have to be charged for a new building to pay off.

In mid-2021, an average of 10.62 euros per square meter was needed to achieve an annual return of 3.5 percent with a new building project.

In the middle of this year it was already 16.87 euros per square meter because of the increased construction and interest costs.

If this development continues, the association considers new building rents of 20 euros and more per square meter to be conceivable.

Built past the target group

GdW President Axel Gedaschko is certain that, given such numbers, the federal government's new construction targets cannot be achieved.

"The 400,000 new apartments per year are waste," he said.

Almost 71 percent of the member companies would postpone construction projects or give them up entirely.

“We are building past our target group because prices have risen so much.

The result is that less is being built.” The GdW represents around 3,000 housing companies in Germany.

These include municipal housing companies and cooperatives, but also the listed Vonovia.

The members represent about 30 percent of the rental apartments in Germany.

The association is also critical of the tightening of new building standards for climate protection planned by politicians, such as a requirement for solar roofs and also the quasi-heat pump requirement from 2024.

Gedaschko calculated that the prices for solar collectors had risen by 23 percent within a year.

"Apparently the income is pretty good here." He therefore fears a further increase in construction prices and thus also in new building rents.

The Bundestag passed an amendment to the law on Thursday, according to which new buildings may only require 55 percent of the energy of a so-called reference house from next year.

Currently, 75 percent is still allowed.

The association's outlook on the expected increase in ancillary costs also reads little edifying.

A one-person household will have to expect additional energy costs of 985 euros this year compared to 2021 in the best case, and an additional 2749 euros in the worst case.

For a four-person household, the expected increase in costs is between 1818 and 5074 euros, with the association expecting an amount at the upper end of this range.

The ban on evictions discussed by politicians for tenants who cannot pay their ancillary costs is of little help, said Gedaschko.

"What's the use of a moratorium if people aren't able to pay what they have to pay afterwards?" Among other things, he suggested temporarily no longer levying the CO2 price on energy.

Vonovia has fitters reduce the temperature

The announcement by Germany's largest housing group, Vonovia, that it wanted to reduce the heating in its apartments to 17 degrees Celsius between 11 p.m. and 6 a.m. caused a stir on Thursday.

"In order to save as much gas as possible in our stocks, we will successively introduce a night-time lowering of the heating temperature for the gas central heating systems," said a spokesman.

During the day and in the evening hours, however, the tenants could continue to heat as usual.

The hot water supply is not affected.

Fitters would make the changes in the coming months.

Such adjustments are legally tricky.

According to the German Tenants' Association, landlords must adjust a central heating system during the heating period from October 1st to April 30th so that a minimum temperature in the apartment of between 20 and 22 degrees Celsius can be achieved.

At night, 18 degrees Celsius was enough.

These temperatures are not laid down in a law, but there are various judgments and often also agreements in rental contracts that can actually only be changed by mutual agreement.

It remains to be seen whether tenants will complain if temperatures are lowered unilaterally.

A few days ago, a housing cooperative from Saxony had already limited the supply of hot water to certain times - without asking the tenants beforehand whether they agreed.