ZIA: Germany's housing crisis is deeper than it seems

The German Real Estate Federation (ZIA) has predicted that the German government will miss its annual new housing construction target significantly in 2024. The government had committed to building 400,000 homes each year, 100,000 of which will be social housing. Last year, 270,000 homes were built in Germany. The leading non-governmental organization in the real estate sector in Germany, the German Real Estate Federation (ZIA), has published the "Spring Report on the German Real Estate Sector 2024." The report estimates that housing construction in Germany could experience a dramatic decline due to high interest rates and regulations, and predicts that there could be a shortage of 720,000 homes in 2025 and 830,000 in 2027. The report emphasizes that the real estate sector is stuck due to costs and requirements for official permits, and that 20.7 percent of construction companies have halted their projects. Real estate experts predict that the German federal government will significantly miss its housing construction target, and that only 150,000 new homes will be built this year instead of 400,000. 'Housing crisis deeper than figures show' The report noted that the country was experiencing a housing problem, stating that "the crisis is deeper than construction completion and building permit figures have shown so far." ZIA President Andreas Mattner stated in his assessment of the issue that the real estate experts' analysis was not just a warning, but in some respects a real alarm, saying, "In order for new housing to be built economically, an average rent of 21 euros per square meter is required. This is not possible. In other words, whoever builds it will go bankrupt." In order to solve Germany's housing problem, the coalition government pledged to build 400,000 homes every year, 100,000 of which will be social housing. 270,000 homes were built in Germany last year. Building new homes is not economically viable Real estate experts say that considering the current levels of unusually high interest rates, land prices, construction costs and rents, building new homes is not economically viable. The energy crisis following the Russo-Ukrainian War, problems in the supply chain, rising costs due to inflation, rising interest rates and a shortage of skilled workers are affecting the German construction sector. It was stated that there was a shortage of more than 600,000 homes in Germany as of the end of last year.