Housing shortage in Germany: construction plans stop, rents continue to rise!

Housing shortage in Germany: construction plans stop, rents continue to rise!

The housing shortage in Germany is expected to become even worse. More and more new construction plans are stalling, and fewer apartments will be completed this year than before. According to the South German newspaper The housing association GdW assumes that only around 218,000 new apartments are expected in 2025. For comparison: In 2024 there were just under 252,000 properties. The forecast for 2026 is only 200,000

One of the main reasons for the delay in new construction is the sharp rise in construction prices, which have become increasingly disconnected from general price developments. Many companies are withdrawing from approved projects because the costs can no longer be demonstrated. Although more funding is being offered, rental apartments in the middle and lower price segments are no longer profitable. This means that many people, including professionals such as police officers and nurses, have difficulty finding affordable housing.

The challenge for politics

The problems in the housing market are seen as a major challenge for the next government. Political promises to turn things around in the construction industry have so far failed to materialise. The traffic light coalition had aimed to build 400,000 apartments annually, including 100,000 publicly funded, but in 2024 only just over half of these apartments were built. This worries not only GdW President Gedaschko, who is skeptical about quick improvements, but also families like the Haferkorns, who are urgently looking for an affordable four-room apartment.

The Haferkorn family can raise a maximum of 1,600 euros per month and have already tried various methods of finding accommodation, but without success. This reflects a widespread reality: rental prices are continually rising across all price segments. For example, a 60 square meter apartment in 2024 would cost 650 euros in Berlin, 790 euros in Frankfurt, 800 euros in Stuttgart and even 1,150 euros in Munich. The situation is particularly worrying for socially disadvantaged households, who often receive rejections when applying for housing because of their name or origin.

The need for a new beginning

The federal government is now planning measures to support the new building. The new Construction Minister Verena Hubertz (SPD) would like to boost new construction by relaxing legal requirements and speeding up approval procedures. A newly approved “construction turbo” is currently being discussed in the Bundestag. Hubertz has set the ambitious goal of halving the construction costs.

Nevertheless, the decline in social housing is an alarming development. While there were four million social housing units in West Germany in 1987, today there are only 1.1 million. Critics complain that the state accepts high rents for recipients of citizens' benefit, which is increasingly making the situation worse. A new building with 76 apartments has already been built in Reutlingen, with an average rent of 8.88 euros per square meter. Nevertheless, the call for higher inheritance taxes for the super-rich and new support programs to finance them remains strong.

The challenges are enormous, and it remains to be seen whether the political turnaround in housing construction can actually be initiated. The necessary steps must be taken urgently, with the demand for new buildings being 320,000 apartments per year by 2030, according to the BBSR.