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Significant decline in the number of building permits: “The catastrophe scenarios from last year have been exceeded by reality.”

Photo: Ina Fassbender / AFP

Higher costs for building materials and poorer financing conditions are affecting the construction industry: Despite strong demand for living space, the number of building permits in many regions of Germany fell last year to its lowest level in more than ten years.

As the Federal Statistical Office in Wiesbaden announced, the construction of 260,100 apartments was approved in 2023 - that was 26.6 percent less than the previous year and also the lowest level since 2012. The construction industry warned of job losses and an increasing housing shortage and called for more support from the federal government and countries.

The number of building permits is also an "important early indicator of future construction activity, since building permits represent planned construction projects," according to the Federal Statistical Office's statement.

The decline was particularly noticeable in the number of approved building applications submitted by private individuals: there were 81,300 housing construction projects - 42.2 percent fewer than in the previous year.

Companies received 117,700 permits, a decrease of 20.3 percent.

The number of approved public building applications fell by 12.1 percent to 11,000.

In particular, building permits for single-family homes (minus 39.1 percent) and for two-family homes (minus 48.3 percent) are declining sharply.

Approvals for new apartments in multi-family buildings fell by a good 25 percent.

The trend was also evident in non-residential buildings, i.e. offices, warehouses or factories, as the statisticians also reported.

Here the so-called enclosed space is the important indicator.

In the case of approved non-residential buildings, this converted space fell by 15.7 percent year-on-year to 199.5 million cubic meters.

That was the lowest value since 2015.

“The disaster scenarios from last year have been exceeded by reality,” said Dirk Salewski, President of the Federal Association of Independent Real Estate and Housing Companies.

“Even the building permits that have been issued often no longer become construction sites.” He criticized the federal government for being hesitant to react.

“Germany is in a massive housing construction crisis,” said Felix Pakleppa, managing director of the Central Association of the German Construction Industry.

"The lack of building permits will lead to a lack of apartments in the coming years." The first step must now finally be to pass the Growth Opportunities Act, which contains tax advantages for the construction of rental apartments.

The Union-led states in the Federal Council are currently blocking this.