German real estate industry is sending out an "SOS"
Germany managed to build only 295,300 homes in 2022, well below Chancellor Olaf Solz's target of 400,000 a year.
German Chancellor Olaf Scholz took office with a promise to tackle the country's housing shortage by building 400,000 homes each year.
However, with the term already halfway through, the chancellor's failure to meet this goal has a significant impact on millions of Germans struggling with high inflation, unemployment and rising rents.
Germany managed to build only 295,300 homes in 2022, well below the chancellor's target.
Real estate experts are predicting even lower numbers for this year and next, which is worrying considering the country's 700,000 housing shortage, as estimated by the German Real Estate Association.
"The outlook for 2024-2025 is bleak," warned Dirk Salewski, the head of BFW, the German association of independent real estate and housing companies. "We are witnessing a significant reduction in demand for new developments."
The industry is currently facing a perfect storm, with interest rates and energy prices on the rise, supply chain disruptions leading to increased costs of building materials and a severe shortage of skilled labor wreaking havoc on construction schedules. Contractors reported a significant drop in orders, a worrying sign for an industry that requires long planning times.