The housing market is poised to face significant challenges, with experts predicting continued rent increases in 2025 due to insufficient new apartment construction. A mere 150,000 new units are expected to be built in 2023, far short of demand. This shortfall is exacerbated by high construction costs and limited building permits over the past two years, contributing to a persistent housing shortage.
Compounding the issue, the number of social housing units has dramatically decreased by nearly 400,000 since 2014, intensifying the strain on available affordable housing. As a result, nearly a quarter of households are burdened by high rental costs, allocating more than 30% of their income to housing. The situation is dire in urban areas like
Berlin, where rents have surged by 26.7% last year alone.
The construction industry is calling for a decisive policy shift from the government, including merging the housing and climate ministries to streamline processes and reduce bureaucratic hurdles. A reliable support framework is also essential to encourage new developments and address the growing demand fueled by migration and insolvencies in the construction sector.
Purchase prices, while increasing moderately, remain unaffordable for many. Despite a slight decrease in interest rates, the potential for further reductions appears limited, offering little relief to potential buyers. The economic environment, characterized by inflation and regulatory uncertainties, continues to burden both tenants and buyers.
To mitigate these challenges, policymakers are urged to enact reforms that stimulate construction and address the acute housing deficit. Without such interventions, the housing market is likely to remain under pressure, impacting affordability for tenants and buyers alike.
