Approximately one in ten Germans lives in an overcrowded apartment. For this reason, the associations are asking for more government funding on Home Construction Day.

Apartment building with many balconies.

Multi-family house in Colonia: from the point of view of the construction sector and those looking for housing, very little is built Photo: Oliver Berg/dpa

SEDAN taz | More public financing and fewer construction requirements: this is how the construction sector imagines the way out of the crisis. “Under current conditions, our companies are forced to suspend new construction because they are no longer affordable for both builders and future tenants,” warned Axel Gedaschko, president of the Central Association of the Housing Industry (GdW). , on Thursday in Berlin.

Axel Gedaschko, President of the Central Association of the Housing Industry

We don't have to promote frosting, but rather affordable whole wheat bread.

On House Building Day, the Association of House Builders, which includes the German Tenants Association, the trade union IG Bauen-Agrar-Umwelt, as well as associations in the housing and construction sector, demanded subsidies for 23,000 million euros per year. 15 billion euros for the 100,000 new social homes promised by the government, another 8 billion euros for the construction of 60,000 affordable apartments.

These subsidies should not be tied to such high standards either. “We don't have to promote frosting, but rather affordable whole wheat bread,” says Gedaschko. This meant, for example, dispensing with elevators and balconies or imposing fewer insulation standards.

Two studies were presented at the sector summit. On the one hand, the focus is on the evolution of construction costs and their social consequences. On the other hand: the economic importance of the German construction industry.

According to a new study by the Working Group on Contemporary Construction (Arge), 11 percent of the population currently lives in overcrowded apartments, that is, in very little space. At the same time, construction costs have increased by 42 percent since 2020, explained study leader Dietmar Walberg. “In order to quickly get back to building affordable housing, we need to immediately seize every opportunity to reduce construction costs.” The only way to do that is to lower the standards.

“There will be no permanent subsidies”

According to the second study by the consulting firm of the German Institute for Economic Research (DIW Econ), global investment in housing construction has been decreasing for three years. According to forecasts, in 2024 they will fall by 5.4 percent in nominal terms. This has fatal consequences for the economy.

For the year 2023, a gross added value of around 537 billion euros was calculated, a value that is used as a measure of economic performance. This means that “one in every seven euros of the gross added value of the economy as a whole is related to the housing construction industry”, as well as one in every seven jobs.

6.6 million jobs were directly and indirectly related to the housing industry. And they contributed 141 billion euros to state tax revenues, that is, 17 percent of total tax revenues. The expected drop would mean an estimated loss of 5 billion euros in tax revenue.

Federal Construction Minister Klara Geywitz (SPD) and Federal Economy Minister Robert Habeck (Greens) clearly rejected the high subsidy demands. “It won't work with a permanent subsidy across the board,” criticized Geywitz. A market is needed “where it is viable to invest in the construction of housing with private financing.”

Habeck even saw slight signs of improvement: inflation had fallen sharply and interest rates would also fall again in the foreseeable future. “We have to hold on a little longer and this is the honest answer, the honest analysis,” he said.

“Renewal is increasingly important”

Bernhard Daldrup, housing policy spokesperson for the SPD parliamentary group, believes that not only politicians have duties. “The industry that is accustomed to making profits” is “facing innovation deficits that are barely discussed publicly,” he explained to the taz. Digitization or the construction of modular and serial homes “are only accepted by a few.”

Green deputy Kassem Taher Saleh, who is also a civil engineer, stressed that in the current recession “renovation is increasingly important.” Energy efficiency requirements “should not be eliminated, but rather expanded through specific financing.” taz.

The Caren Lay housing policy required the federal government to invest more in social and affordable housing. The traffic light invests “too little and without specific objectives,” said the left-wing politician to the taz. In fact, the federal government had promised 400,000 apartments a year, of which 100,000 would be social housing, but that is still a long way off.