Housing Shortage in Germany Reaches 20-Year High, Experts Warn of Worsening Conditions

The housing shortage in Germany has reached its highest level in 20 years, with around 700,000 new residences needed to alleviate the pressure on the real estate market. The shortage is attributed to several factors, including increasing construction costs, high-interest rates, and an influx of refugees.

Experts warn that construction investments are less attractive in many areas, and the sharp increases in construction prices and interest rates in recent months have negatively impacted many construction projects, exacerbating the housing shortage.

In addition to these factors, the arrival of Ukrainians to Germany following the start of the Moscow-Kyiv war on Feb. 24, 2022, has added to the demand for housing units, straining the already tight housing market with an additional 200,000 housing units needed. In response, the German government is working to address the housing shortage by implementing policies to increase the supply of affordable housing and limit rent increases.

However, the crisis persists, and in Berlin, the state government held a referendum to expropriate thousands of houses from real estate companies due to protests against rent increases. The majority of voters (56.4 percent) supported the expropriation of over 240,000 apartments, as the companies own more than 550,000 residences worth €100 billion in Germany, where half of the population lives on rent.

The average rents in Berlin have increased by over 100 percent since 2010, with new apartments being rented for at least €26 per square-meter. The rising rental prices have made it difficult for many families to find affordable housing, forcing them to live in cramped conditions or in areas with limited access to essential services.

It is clear that more needs to be done to address the root causes of the problem, such as rising construction costs and interest rates. Unless significant action is taken, the housing shortage in Germany is likely to persist, causing continued economic and social problems for families and communities.

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