Germany, having experienced the end of a decade-long housing boom, is currently grappling with challenges that demand a strategic approach to overcome difficulties in the real estate sector. As of the beginning of 2023, the volumes of new construction have plummeted significantly by 47%, compared to the averages of the previous two years. Another crucial factor is the reduction in the number of new building permits, which has decreased by 27% in the first five months of the current year.
The economic impact has also reflected on housing prices, which saw a decline of 6.8% year-on-year in the first quarter of 2023, marking the most substantial drop since the inception of statistical data collection. September's statistics will be a crucial indicator to determine the sustainability of this trend.
In response to these challenges, Minister of Housing Construction Clara Geywitz proposed additional tax incentives to encourage the construction of new residential homes. Simultaneously, the President of the German Property Federation, Andreas Mattner, and the head of the Federation of the German Construction Industry, Tim-Oliver Müller, put forth their initiatives, including a temporary suspension of the property sales tax and the introduction of a low-interest credit program.
However, experts, such as the CEO of Bulwiengesa, Sven Carstensen, fear that the current real estate market crisis will continue to take place in the near term. In such a challenging situation, only a comprehensive approach and coordinated efforts will be required to support and revitalize the market.