Subsidies for New Construction

The housing shortage continues to be in public consciousness. Despite that, there’s still room on the part of politics to take further, counteractive measures.

There’s much potential for new construction – if requirements are being met. (Image: Pexels.com)

Demand for living space remains high. But at the current new construction activity, merely 250,000 finished flats are presumed for the current year – which misses the German governments target of 400,000 new housing units per year yet again. In the recent publication „BFW-Neubauradar“ (BFW new construction radar) of the German Association of Property and Housing Enterprises (BFW), there’s praise for the good business situation on the real estate market, but also pointers for a lack of construction land and specialists, as well as for several regulations that curb new construction.

Andreas Ibel, president of the association, holds politics responsible for the curbing framework conditions. The related poll reveals that almost 70 percent of the participating real estate companies share Ibels opinion on increasingly strict standards.

Municipalities and authorities raise costs and effort

The lack of undeveloped plots for instance is the main obstacle for building investment for 95 percent of all respondents. A third also states that municipal companies would have an advantage towards private businesses. For 40 percent, municipalities would be responsible for high production costs, since they’d generally assign construction land at maximum prices. This would also lead to higher rental prices eventually.

For 75 percent, administrative hurdles pose the main reason for a reduced new construction activity. With that, 40 percent consider the time consuming and complicated communication periods with the authorities the biggest cost driver, which would also be due to lengthy planning and authorisation procedures. Within building regulations, 39 percent think energetic requirements raise the costs – still ahead of fire and sound protection.

Now, politics need to take action

According to the BFW, due to plenty of regulations, the new construction activity can’t progress as much as necessary in order to meet the housing needs. 70 percent find fault with a lack of specialists as well. Since stricter regulations require more experts, this would further intensify this development. “If politics would finally trim & simplify the Federal State Building Order, we could build way more with the same capacities”, the president of the association remarks.

Because of these hurdles, 63 percent consider housing construction in b-locations more attractive, turning towards these more and more. Here, Ibel sees a need for action for the housing policies, since the need for living space rises in a-locations especially. But these regulations hinder a sufficient capacity to meet demand. He demands the federal government, federal states and municipalities to additionally promote new constructions – and with that living space – in the future.

In the course of its business survey, the BFW asked 1,600 medium-sized member companies, which are providing 50 percent of new construction in Germany. Since the BFW is being heard during construction-related legislations of regional parliaments and the German Bundestag, it is an essential voice of the industry in politics.

More on this topic:

Study: More living space through conversions

Top 7 locations: Building activity varies heavily

Berlin: New sales record

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