Housing construction: planned for the green | TIME ONLINE

Housing construction: planned for the green |  TIME ONLINE

Olaf Scholz seemed pretty safe. No, interest rates are not responsible for the fact that so little is being built. Although they rose quickly, they were higher in the 1970s than they are today, said the Chancellor at a local newspaper event last weekend Heilbronn voice. And back then, more new apartments were built than today.

In fact, the properties are often quiet at the moment. Of the 400,000 new apartments originally politically planned for this year, only a little more than half are expected to be completed. The backlog – i.e. the number of apartments currently actually needed – is even several hundred thousand higher. The problem is so big that in the last few days many people have spoken out with suggestions as to how it should be solved: the Chancellor, the responsible minister, the housing industry and industry.

In his proposed solution, Olaf Scholz also resorted to a recipe from the 1970s, when interest rates were higher, but municipalities designated one new development area after the next. As was the case back then, more houses must be built on greenfield sites today. All in all, said the Chancellor, “probably 20 new districts are needed in the most popular cities and regions.” He also criticized the fact that in recent years many apartments had not even been built despite approval. And that, if at all, they were often so expensive that normal earners couldn’t afford them.

Both are true, as shown by data from the Working Group for Contemporary Building (Arge) from Kiel, which presented its latest report in the spring. Accordingly, there is currently a backlog of well over 700,000 apartments – so many have been approved but have not been completed for various reasons. The median cost of building an apartment in large cities today is more than 5,100 euros per square meter. Anyone who cannot rely on funding for financing will therefore have to charge just under 18 euros per square meter when renting. The most significant cost drivers are all sorts of technical requirements for buildings as well as the increased prices for building land. Maybe that’s why Scholz recommends moving to the green meadows on the outskirts of the city: at least land there is cheaper than in the city center.

Federal Minister of Construction Klara Geywitz (SPD) had already last week presented the “Turbo Pact”., which the federal and state governments have agreed on. Their promise is: “plan faster, approve faster, create housing faster”.

The crane stands still

Proportion of companies complaining about restrictions

Source: Ifo economic surveys (October 2023) © ZEIT-GRAPHIC

A series of concrete measures are intended to fulfill this promise. For a transitional period, applications are automatically considered approved if the responsible authority has not yet made a decision on them after three months. Residential and commercial areas should also be allowed to be built closer to each other than before – even if this results in higher noise pollution because the private garden can then border on the courtyard of a locksmith’s shop.

According to the will of the federal and state governments, the expansion of attics into living space should be possible in the future without requiring approval. In addition, the obligation to set up car parking spaces in apartments should be standardized nationwide and adapted to actual needs. If there are subway or bus stops nearby, fewer parking spaces are often needed than expected. These are expensive in any case: Researchers from the German Economic Institute in Cologne have determined in a commissioned report for the real estate industry that a parking space in an underground car park causes ten percent of the total costs of the associated new apartment.

Also serial building the government wants to make it easier. Industry and the housing industry expect major savings from this.

Serial construction has a lot to do with standardization and is vaguely reminiscent of the prefabricated house principle. Building types that have already been approved in one location will in future be allowed to be built elsewhere without new approval. Having entire parts such as facades prefabricated in factories instead of putting them together by hand on the construction site saves time and money. The Federal Association of German Housing and Real Estate Companies states that the costs could be reduced to amounts “between 2,370 and 4,370 euros per square meter of living space”. That would be significantly less than before.

As always with plans, whether they pass the reality test is completely open. Everything often looks completely different on a piece of paper than it does on site.

The situation there is likely to get worse for now. This is suggested by data determined by the Ifo Institute for Economic Research in Munich. The Wave of cancellations in residential construction I have just reached a “new high”.

Every fifth company reports that customers have already withdrawn projects that they had already commissioned. One in ten companies already have financial problems because of this. “The outlook for housing construction remains bleak,” says Klaus Wohlrabe, the project manager at the Ifo Institute, “companies are preparing for tough times.”

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