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Subsidized housing in Freiburg: Higher housing allowance as an alternative?

Photo: Eibner-Pressefoto / picture alliance

The situation of social housing will remain tense in the coming years. By 2035, around 40,000 social housing units will fall out of the stock every year, according to a short study by the German Economic Institute (IW), which is available to SPIEGEL. In order to maintain the current level of an estimated 1.07 million social housing units in Germany alone, 519,000 new ones would have to be built by then – more than 40,000 every year.

"It's simply not a good time to build," says Philipp Deschermeier, who researches housing policy and real estate economics at the IW. "In combination with the increased cost of living, the pressure is particularly high."

The German government has set itself the goal of building 100,000 social housing units annually in Germany, but in 2022 it is estimated that only a quarter of these were built nationwide.

According to Deschermeier, however, it is not possible to say how great the need for social housing is, as the government's goal is a normatively defined figure. "The apartments that are lacking in North Rhine-Westphalia may be too many elsewhere," he says. Against the emergency situation on the ground, Deschermeier proposes an increase in housing benefit as an alternative.

What will become of the funding for "Young Living"?

Young people are often affected by the sluggish construction of social housing. Among other things, the federal-state programme "Young Living" is intended to create new living space, especially for trainees and students. According to Deschermeier, however, the program, which was funded with half a billion euros in 2023, is on the brink for 2024 due to the uncertainty following the Federal Constitutional Court ruling on the federal budget.

"If this is not extended, it will affect a group that is already having a very difficult time on the housing market. It competes with commuters and high-earning singles," warns Deschermeier. He demands: "This must be made permanent."

However, it is possible that subsidised social housing will become more attractive again in the near future. "In a phase in which uncertainty is very high, it is again an option for one or the other investor," says Deschermeier. This is all the more true because subsidies are no longer available in privately financed housing construction.

Rents and occupancy of social housing are regulated by the state. Only people who are in need from the point of view of the authorities are allowed to live there. However, after a certain period of time – for example, after 30 years – the apartments fall out of this bond. They can then be rented out at a higher price.

The Länder are responsible for the construction of social housing. However, the federal government subsidizes the construction to a large extent.