The initiative “Unblock the construction backlog now!” criticizes the lack of new housing construction in Germany. According to the association from the construction industry, the government is failing to meet all its targets, which is having drastic consequences for the population. More about the initiative here.
New residential construction in Germany is lagging well behind the target of 400,000 new housing units per year. Image source: Pixabay
Medium-sized companies such as building materials manufacturers support the campaign
The CEOs of leading companies in the German construction industry have joined forces in the “Unblock the construction backlog – now!” initiative to tackle the lack of new residential construction in Germany. In a European comparison, new construction in Germany is in last place with a percentage decline of 32% between 2021 and 2025. Germany is therefore missing its targets for new housing construction, which, according to the initiative, has drastic consequences for the population due to rapidly rising rents. “Unblock the construction traffic jam – now!” calls on the federal states to suspend the real estate transfer tax from 2024 in order to reduce construction costs. Many medium-sized companies, such as building materials manufacturers, are supporting the campaign.
Impending collapse of the residential construction industry?
In Germany, 400,000 new housing units are needed every year to provide sufficient living space. However, the Institute for Macroeconomics and Economic Research estimates that only 250,000 new homes will be completed in 2023 and less than 200,000 in 2024. The reasons for this are high interest rates and high construction costs. As a result, the construction backlog in Germany totals over 500,000 apartments.
Bureaucratic hurdles often exacerbate the situation. Ancillary construction costs such as land purchase tax and VAT, energy requirements and requirements for building standards often account for over a third of construction costs. And the complex, inconsistent building regulations are making construction increasingly difficult. Leading construction companies are calling on the federal states to make a contribution with the “Clear the construction traffic jam – now!” initiative. In particular, the suspension of real estate transfer tax, which is over six percent in some states, should help to reduce costs. Alternatively, according to the initiative, there is a risk of the housing construction industry collapsing, which would also have a negative impact on Germany’s gross domestic product.
Among other things, the initiative "End building congestion now!" is calling for the real estate transfer tax to be suspended from 2024. Image source: Pixabay
"The 40 million square meters are missing exactly where people want to go"
Sebastian Lopitz from the Lopitz planning office carried out the analysis of the housing shortage in Germany for the initiative. In the interview, the urban planner and industrial engineer explains that the housing shortage depends on the region: “According to our analysis, there are around 100 districts and independent cities in Germany where there is an actual, sometimes dramatic housing shortage – the 40 million square meters mentioned. 60 districts and independent cities have larger surpluses and 220 cities and regions have small surpluses amounting to the so-called fluctuation reserve (five percent and less). This describes the vacancy rate that is necessary to ensure that people looking for accommodation still have a choice of apartments. We see that the residents of rental apartments move every six to ten years, and then these 40 million square meters that are missing are a problem. Because they are missing exactly where people want to go, because there are jobs and study opportunities.”
Initiative calls for ten measures
The Conference of Construction Ministers on November 24, 2023 did not decide to suspend the real estate transfer tax from January 2024, as demanded by the initiative. However, the ministers addressed the urgency of the issue and are proposing more construction in existing buildings. They are also urging the federal government to simplify the construction process, reduce bureaucracy and expand digitalization in the sector.
In addition to pausing the land transfer tax, the initiative calls for the following measures on its website:
- “Tax depreciation for private individuals too”
- “70 billion euros for the construction of new apartments with a rent cap”
- “Separate building subsidies from heating regulations”
- “World’s best energy standard is enough”
- “Reduce construction interest rates with a special loan program”
- “Make existing space available more quickly”
- “Special program for age-appropriate conversion”
- “Radical standardization of building subsidies and reduction of bureaucratic hurdles”
- “Radical simplification of building standards for the whole of Germany”
On its website, the initiative “Unblock the building traffic jam – now!” presents facts and figures on the topic.
Read more: The Climate Protection Act also affects the construction industry. The government was recently ordered to take immediate measures to achieve the climate targets. Read more here.