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Vonovia construction site in Berlin

Photo: Britta Pedersen / dpa

Germany's largest real estate group, Vonovia, says it is refraining from building tens of thousands of new apartments for the time being due to high interest rates and construction costs. "We have plans for a total of 60,000 apartments in the drawer," CEO Rolf Buch told the newspapers, which belong to the Funke media group. "We'll get everything ready up to the building permit. And we hope that building will soon be worthwhile and profitable again. Then we want to build again immediately.«

From Buch's point of view, there is currently a shortage of more than one million apartments in Germany. "My estimate is that we need 700,000 apartments a year, also because of increasing immigration." So the problem is not a million homes, but several million homes that are missing in a very short time.

Soon less than 200,000 new homes per year?

In the wake of interest rate hikes by the European Central Bank, financing costs for real estate have risen significantly. Loans are only available on much more expensive terms. In addition, a shortage of craftsmen and inflation are fueling the increase in the cost of building materials and construction services.

The real estate industry is therefore warning of a drastic slump in residential construction. Actually, the federal government had once aimed to build at least 400,000 apartments per year. In 2024, however, only a little more than 200,000 could be built, according to the umbrella association for the housing industry (GdW). In 2025, the number of completed apartments could then fall even further, well below the 200,000 mark. The association is therefore calling for a reduction in VAT from 19 to seven percent for building materials and services.

The number of building permits fell by 31.5 percent in July compared to the same month last year, according to the Federal Statistical Office. Meanwhile, the Federal Ministry of Construction has promised that it will work "intensively on a package of measures to revive the construction and real estate industry".