Germany is looking for ways to deal with the crisis in the real estate market

The ten-year boom in the German housing market was promoted by the era of cheap money. But now it has come to an end, and the country's real estate sector is struggling with difficulties.

The volume of new construction in the first half of 2023 fell by 47% compared to the average over the past two years, and the number of new construction permits decreased by 27% in the first five months of this year.

Housing prices have also declined. In the first quarter, it increased by 6.8% year-on-year, which is the maximum drop since the German statistical office began collecting data.

September statistics will show how much this trend continues.

"The current crisis will certainly continue for some time," said Sven Carstensen, chief executive of Bulwiengesa, a real estate consulting and analysis firm.

Last week, German Housing Minister Clara Geiwitz called for additional tax benefits to write off the costs of building new residential buildings.

Andreas Mattner, President of the German Property Federation, insists that the government temporarily suspend the real estate sales tax and introduce a low-interest loan program to support new housing construction.

Tim-Oliver Muller, head of the German Construction Industry Federation, demands an emergency package of measures that will include the sale of public land at a reduced price.

A source: Reuters