Because of the poor economic conditions, experts are expecting a decline in residential construction in Hesse.

"We have a few difficult years ahead of us," says economist Dieter Rebitzer, who wrote the economic report on the housing industry in Hesse, Rhineland-Palatinate and Saarland.

Gerald Lipka, Managing Director of the State Association of Independent Real Estate and Housing Companies BFW, is also expecting a massive slump: “Builders and companies are completing existing projects.

However, many new construction projects are no longer being tackled.”

Rainer Schulz

Editor in the Rhein-Main-Zeitung.

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This is due to several factors.

On the one hand, construction costs have continued to rise.

Shell construction costs increased by 14.6 percent last year.

The prices in timber construction rose the most: this trade rose by 33.9 percent within a year.

But you also have to pay 18.7 percent more for roofing work than a year earlier.

In addition, there are delivery bottlenecks and rising building loan interest rates.

According to Lipka, financing costs have tripled, from one percent in 2021 to three percent now.

For homebuyers who take out a loan of half a million euros, this means a monthly additional burden of more than 800 euros.

It is becoming increasingly common for notary appointments to be cancelled.

"There is a threat of an emergency stop in housing construction," says Lipka.

The significantly increasing construction overhang already indicates this.

According to the economic report, the number of building permits in Hesse rose by 1.7 percent to 27,713 in 2021.

Only 22,952 apartments were actually built, an increase of 0.8 percent.

As a result, the construction backlog - the difference between approved and built homes - has increased by 5.3 percent.

Particularly serious situation in metropolitan areas

Experts don't expect housing prices to fall because production costs remain high.

"There will be a significant drop in construction activity," Lipka expects.

And Rebitzer also believes that investors will hold back: "Building is becoming more and more expensive, the end customer can no longer pay for it.

Then you don’t build any more.”

All political levels must ensure that housing construction does not become more expensive.

"This requires available and affordable land, streamlined development plans, fast approval processes and a little more economic realism," says Lipka.

It is unacceptable that with rising material prices and interest rates, many municipalities are still of the opinion that they can easily burden property developers with the costs for paths, parks, squares, gas and water pipes as well as daycare centers and schools.

"Apartments, which now cost 6,000 to 8,000 euros per square meter due to additional political burdens in metropolitan areas, can no longer be afforded by middle-class families."