Housing Crisis in Germany: Analyzing the Reasons and Backgrounds
The global issue of rising real estate prices and rental rates has unfortunately led to a housing crisis in numerous countries, including Germany. Affordable housing has become increasingly elusive, particularly in major cities such as New York, London, Hong Kong, and others.
Key facts and indicators regarding the situation in Germany:
Fear of Real Estate Investment: Unlike in Asia, where purchasing property as an investment is widespread, Germans exhibit a reluctance to view real estate in this manner. Despite the ability to acquire property thanks to low-interest rates and the option to pay off bank installments over an extended period, Germans are averse to taking on loans. Additionally, the concept of investing for the family’s future is not as prevalent.
The German government has implemented protective measures for tenants, including laws that prevent eviction and provisions for property maintenance. They have also supported the establishment of housing associations known as “Genossenschaften,” which aim to collectively generate financial resources for future real estate projects.
Housing associations in Germany, including Genossenschaften, have become excessively bureaucratic, leading to significant delays in acquiring suitable and affordable housing. Furthermore, there is a noticeable trend of privatization within these associations.
Complex Legislation: While German laws aimed at supporting personal housing projects have positive aspects, such as preventing real estate bubbles, they have also created substantial bureaucratic hurdles. Construction processes have become time-consuming, complex, and expensive due to these regulations.
A concerning trend in German large cities is the prioritization of luxury real estate over addressing housing as a fundamental right or finding practical solutions. Media coverage often emphasizes political parties’ pledges to support social housing and provide affordable apartments for low-income individuals, thereby turning housing issues into political leverage.
Germany’s economy is widely recognized as stable and robust due to its industrial structure. However, any inflationary pressures on prices can impact the competitiveness of German products in the global market. Therefore, the recent inflationary trend in Germany is viewed by some as a cause for concern.
Despite the challenges highlighted, there are reasons for optimism. Germany is experiencing a slight construction boom, particularly in residential projects. However, this boom is not as substantial as those seen in countries like China. Unfortunately, salary improvements for engineers and workers involved in construction have not been significant thus far.
Key Strengths of the German Construction Sector in a Nutshell:
- Avoidance of Real Estate Bubbles: Germany focuses on building as needed, preventing the occurrence of real estate bubbles that have led to economic crises in other countries.
- Emphasis on Quality and Safety: Building projects in Germany prioritize quality, safety, workers’ rights, and environmental protection. The construction process, from concept to implementation, takes the necessary time to ensure these standards are met.
- Transparent Legislation: Complex legislation ensures transparency, preventing tax evasion and manipulation of real estate areas. It also guarantees adherence to urban development plans and promotes the use of German construction materials.
- Environmental Responsibility: Building codes in Germany promote environmental respect, with funding initiatives like KfW loans supporting sustainable practices. Preservation, restoration, and renovation are prioritized over demolition and complete reconstruction, as exemplified by the treatment of architecture in former East Germany after reunification. A good example is the way that buildings –such as WBS 70– in east Germany GDR has been treated after the reunification
However, there are some drawbacks to the German legislation and laws governing the real estate market. They have contributed to a national housing crisis, making finding accommodation a challenging mission. Additionally, delays in mega projects often stem from funding and political issues rather than engineering failures. These project delays are frequently exploited by political parties for electoral gain.
In summary, the housing crisis in Germany has multiple factors at play, including reluctance toward real estate investment, bureaucratic challenges, complex
Cover photo details
Designing competition from H2B Architekten for the Neubrandenburg Housing Association Neuwoges.
Concept, architectural designing, and 3D-rendering by Siamnd Ossi