Housing Market Remains Stagnant: Fewer Residential Construction Projects in Comparison to 2015 Levels
Germany's Housing Construction Slows Down in 2024
The German government's housing construction initiative has encountered a setback: in 2024, only 251,900 apartments were built, the lowest number since 2015. Rising interest rates and construction costs have made new housing projects less financially viable, resulting in a decline of 14.4% from the previous year, according to the Federal Statistical Office (Destatis). This marked the first significant decrease in completed apartments since the number averaged around 294,000 annually from 2021 to 2023.
The decline was particularly pronounced in single and two-family houses, which are primarily built by private individuals. The total number of building permits issued also fell by 11.5% year-on-year in 2024, with residential building permits decreasing by 13.4%. The reduction in permits directly contributed to fewer new homes being started.
Weak demand from both the industrial and residential sectors, exacerbated by economic uncertainty and reduced purchasing power, also played a role. Additionally, elevated inflation, high energy costs, and political instability following the collapse of Chancellor Olaf Scholz's government in December 2024 added further pressure.
As a result, the number of new homes built in Germany dropped by 14.4% in 2024 compared to the previous year. This development highlights the challenges the new government faces in addressing the nation's housing shortage.
The decrease in housing construction in Germany in 2024, due to factors such as rising interest rates and reduced purchasing power, may impact the real-estate sector and potential investing opportunities. Consequently, the slowdown could intensify the ongoing housing-market issue, as the new government navigates the challenges of meeting the country's housing demands.
