WIESBADEN (dpa-AFX) - A major setback in the struggle against housing shortages and surging rents: In 2025, residential completions in Germany hit their lowest point in over a decade. With only 206,600 units built, the figure represents an 18 percent drop, or 45,400 fewer homes compared to the previous year, according to the Federal Statistical Office. This marks the lowest level since 2012. Furthermore, completions fell significantly for the second consecutive year, after hovering around 294,000 annually between 2021 and 2023.

Federal Building Minister Verena Hubertz (SPD) described the figures as poor, calling them the 'result of recent years of crisis'. 'Approximately 206,000 homes built last year is not enough. That is the honest message to everyone currently looking for a flat', she told the 'Rheinische Post' (Saturday). However, she noted that building permits for 2025 and the first quarter were trending upward. The new 'Bau-Turbo' (construction accelerator) is already being implemented in many municipalities, and record funding is flowing into social housing.

Construction and Housing Industry Issues Alarm Signal

An alliance of construction and housing industry associations called the data an alarm signal and criticized government policy: 'Completion figures are not a matter of fate, but the result of years of inadequate framework conditions. Deteriorating financing conditions were met with complex, fragmented subsidy programs and further tightened requirements, leading to cost increases.'

The alliance, which includes the Central Real Estate Committee (ZIA) and the HDB construction industry association, demanded a series of measures, including improved depreciation options, a halt to stricter rent regulations, and simplified building codes. Furthermore, first-time buyers should be exempt from real estate transfer tax.

Currently, less than half of the population lives in owner-occupied housing, making Germany the laggard in the EU. 'The lack of housing is the greatest social problem in Germany', said HDB President Olaf Demuth. Chancellor Friedrich Merz must make the issue a top priority.

More Than Two Years from Permit to Completion

While there had been recent hopes for an end to the residential construction crisis - with building permits rising nearly 11 percent to 238,100 units in 2025, the first increase since 2021 - structural problems persist. The construction backlog of permitted but not yet completed homes stagnated at 760,700 units, of which 307,200 were already under construction.

Many projects had to be abandoned as permits expired. This occurred for 35,700 units - the highest figure since 2002. Additionally, the time from permit to completion for new builds rose to 27 months, up from just 20 months in 2020.

Iran Conflict Dampens Outlook

Experts fear that residential construction will not emerge from the crisis quickly, even though permits rose by a further 15 percent in the first quarter. The conflict involving Iran has driven up the cost of building materials and transport for construction firms, who are passing these costs on - particularly for steel, concrete, insulation, and membranes. Construction costs rose by six percent in the first quarter alone, according to HDB President Demuth. Amid inflation fears following the oil price shock, mortgage rates have also ticked up, making projects more expensive for investors and developers.

Missed Targets and New Policy Impulses

Residential construction has been stalling for years; costs had already skyrocketed following the war in Ukraine. It is estimated that Germany lacks around one million homes, particularly in urban areas. This is driving up rents and making it difficult for many to find housing. The previous 'Traffic Light' coalition of SPD, Greens, and FDP had set a target of 400,000 new units per year, but consistently failed to meet it.

The current federal government aims to drive construction through faster permits via the 'Bau-Turbo' and has reactivated subsidies for energy-efficient building under the popular EH 55 standard.

'We will shortly present the Building Code upgrade, which will significantly accelerate planning and permit processes once again', Minister Hubertz announced. Furthermore, the government is working on 'Building Type E' for cost-effective construction, the consolidation of subsidy programs, and plans to extend support for energy-efficient building. 'All of this will help to bring completion figures back up, even in a persistently difficult environment.'/ceb/als/DP/men