According to the housing industry, the housing market will not recover anytime soon. The outlook is not only bad for this year, but also for 2024, said Gerhard Lipka, Managing Director of the State Association of Independent Real Estate and Housing Companies at the presentation of the economic report for Hesse, Rhineland-Palatinate and Saarland. There are signs of a massive slump in private construction investment. This is indicated by the decline in building permits in the first months of this year, according to the association, which mainly represents small and medium-sized companies.
Günter Murr
Editor in the Rhein-Main-Zeitung.
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The impact is significant, as private builders are responsible for more than half of the construction activity in Hesse. Their share is greater than that of the large housing associations. "Unfortunately, the importance of private investment in housing construction is misunderstood," Lipka said. Countermeasures must be taken in good time. But politicians have not yet grasped the drama.
Calls for tax incentives
The association presented a list of measures that it believes could lead to a turnaround. These include repeatedly mentioned proposals such as the reduction of building regulations, a reduction in real estate transfer tax and reliable funding conditions. When it comes to climate protection, it is necessary to concentrate on the most effective measures, Lipka demanded. For example, it makes no sense to prescribe insulation that reduces emissions by one percent but increases costs by eight percent. According to Lipka, tax incentives for the formation of home ownership or improved depreciation options for investments in new housing could help.
Lipka has clear expectations of the municipalities: they would not only have to designate more building land, but also rethink their expectations. If, for example, it is demanded that investors build a day-care centre for the municipality free of charge, this endangers the profitability of housing construction and leads to the fact that in the end no construction is carried out at all. "We will not be able to reverse the trend if there are more and more restrictions."
Construction without new orders
Lipka warned of a "tipping point" in housing construction. The construction industry is still in the process of processing orders that date back to before the start of the Ukraine war. However, since hardly any new projects are being started, there is a threat of short-time work and staff reductions in the construction industry. There will be a shortage of these staff when the economy recovers. "We have to prevent that."
Dieter Rebitzer, professor at the Nürtingen-Geislingen University of Applied Sciences and author of the economic report, backed up the assessments with figures: Private builders had invested 2022.4 percent less in new apartments in Hesse in 4 than in the previous year. In Rhineland-Palatinate, the decline was 3.5 percent. Rebitzer writes in his report: "The housing shortage will persist in the coming years and will continue to worsen in high-demand locations." A general trend reversal in construction costs seems rather unlikely under the current conditions. In order to quickly create more living space, Rebitzer believes that a drastic reduction in regulations, regulations and responsibilities would be necessary. However, he is not very optimistic: there are currently no improvements in sight.