Business & Economy

GERMANY: Politicians aim to create more housing

29 July, 2017

Chancellor Angela Merkel has announced plans for new tax allowances to promote the construction of 1.5 million new apartments throughout Germany during the next legislative period, according to Immobilien Zeitung.

In addition, her Union party has also unveiled plans for Baukindergeld, a per-child payment designed to help families who build or buy a home. The other main political party, the SPD, is also planning to make home ownership more affordable and is planning to launch a Familienbaugeld scheme, a socially tiered help-to-buy scheme for families.
Also, according to the Federal Construction Ministry’s latest Housing and Property Report, the German government is considering increasing the level of housing benefit if rents continue to increase over the next legislative period, the Frankfurter Allgemeine Zeitung reported.
The GdW (Federal Association of German Housing and Real Estate Companies) has fiercely criticised exorbitant construction costs, a shortage of building land, insufficient personnel in planning offices, increased property taxes, excessive energy-efficiency standards and the ongoing debate surrounding proposals to tighten tenancy law.
Axel Gedaschko from GdW has called for the country’s Willkommenskultur towards immigrants to be replicated in an open-arm policy for construction and property development. In his opinion, the fact that Schleswig-Holstein and North Rhine-Westphalia are abolishing the Mietpreisbremse rent controls should be viewed as a first, positive signal.
Red tape also needs to be cut and “not only more, but above all more affordable, building land needs to be freed up”, said Gedaschko.
The Federal Construction Ministry’s latest report also calls for federal, state and municipal authorities to release affordable building land.
German states investing less in social housing
In a separate report, Immobilien Zeitung said that despite massive increases in federal government funding and subsidies, Germany’s 16 federal states are spending less on social housing.
The federal government’s Report on Promoting Social Housing concludes that a total of 24,500 newly built social housing units were completed in 2016. This may be around 10,000 more completions than during the previous year, but still falls far short of the 80,000 subsidised apartments that need to be built each year. Over the same period, central government funding for social housing construction doubled, although this has not led to a corresponding increase in social housing, concluded the report’s authors. This was because the states, that were given more financial freedom in 2014, did not fully pass on the increased funding to the social housing sector.
The current round of federal funding is due to expire in 2019, at which point some states will no longer have sufficient funds to cope with the enormous demand for new social housing. According to the Federal Construction Minister, Barbara Hendricks (SPD), a constitutional amendment is required in order to allow the federal government to release funds beyond 2019.
Contrary to its own forecasts, empirica has now reported significant increases in both purchase and rental prices for new-build residential property.
In urban municipalities, prices have risen by 9.5% compared to the previous year, or 58.5% since 2004. The greatest increases were in Munich, where advertised prices for new-build condominiums have now risen to almost EUR 7,400/sqm, followed by Stuttgart (EUR 5,200/sqm) and Freiburg (just under EUR 5,000/sqm). Rental prices in Munich are also rising out of line with other major cities. Across Germany as a whole, rental prices have risen by an average of 3.8% over the last twelve months.