By Tom Sims
FRANKFURT (Reuters) – Building permits for apartments in Germany fell 17% in April from a year earlier, government data showed on Tuesday, underscoring a continued downturn in demand in the construction and real estate industry.
Germany has been jolted by the most severe slump in the property sector in decades.
Some 17,600 permits were issued, which is 17% fewer than a year earlier, the data showed, making for a nearly 44% drop over the past two years.
“Since May 2022, the number of building permits for apartments in Germany has only gone in one direction: downwards,” said Tim-Oliver Mueller, head of the German Construction Industry Federation.
The number of building permits is an important indicator of future construction.
For years, low interest rates, cheap energy and a strong economy sustained a boom across the German property sector, which broadly contributes 730 billion euros ($782.56 billion) a year to the nation’s economy, or roughly a fifth of Germany’s output.
That boom ended when rampant inflation forced the European Central Bank to swiftly raise borrowing costs. Real-estate financing dried up, projects stalled, major developers went bust, and some banks teetered. The industry has called on Berlin to intervene.
Building permits for single-family homes plummeted 33% in April from a year earlier, while permits for duplexes dropped 18%.
Germany aims to build 400,000 apartments a year but has been struggling to meet the goal.
“The bitter reality cannot be denied. Germany’s housing shortage continues to worsen,” said Felix Pakleppa, head of the Central Association of the German Construction Industry.
($1 = 0.9328 euros)
(Reporting by Tom Sims, Editing by Friederike Heine and Christina Fincher)
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