Your Path to Owning Real Estate

Number of Planning Consents Hits Second-highest Level since Turn of the Millennium

08.

April 2021

No one would deny that Germany suffers from pent-up demand for new-build housing construction, but at least as far as planning consents go, it is heading in the right direction, as the latest stats confirm: Rarely has the number of approved new flats been higher than in 2020, notwithstanding the coronavirus crisis – 2016 being the only year since the turn of the millennium with a yet higher year-end total. Year on year, the number of planning permissions rose by 2.2 percent to 368,400 in 2020, as the Federal Statistical Office announced – and this despite a setback of 11 percent last December. The increase was calculated as the sum total of new buildings approved for construction and of building works approved in standing buildings. In 2016, the number of approved flats still stood at 375,400. (source: www.handelsblatt.com).

Demand Particularly Strong for Semi-detached Houses

About 320,200 flats in yet-to-be-built residential buildings were approved in 2020, which implies a year-on-year increase by 2.9 percent. Especially in the case of semi-detached houses, the number of permissions increased drastically by about one fifth. In the case of single-family detached homes, the increase in the number of planning consents was 2.4 percent, while for multi-dwelling units, the one-year increase equalled 0.4 percent.

“The trend, while pointing in the right direction, is running out of steam too quickly,” said Axel Gedaschko, President of the Federal Association of German Housing and Real Estate Companies (GdW), as he commented the latest figures. After all, he added, the increase in planning consents had approximated four percent as recently as 2019. “To make genuine progress in the effort to provide affordable housing in Germany, we need a stronger and more constant dynamic in planning approvals,” said Gedaschko.

Tackling the Pent-up Demand

Most metropolises in Germany are suffering from a housing shortage, and the coronavirus crisis has done little to diminish the strong demand – quite on the contrary. Cooped up during the lockdown, many people have reconsidered their domestic arrangements and now expect more from their homes. The pandemic “has shown us how important the private home is – with virtually everything taking place at home now,” said Tim Lorenz, Vice President for Economics of the Main Association of the German Construction Industry. The nationwide backlog of unmet demand has moved even more into focus against this background. This is why industry experts are studying the level of planning consents in order to derive forecasts for future construction volumes. It is not at all uncommon, however, that approved residential units are not actually built – one of the reasons being the lack of capacity among contractors as a result of the real estate boom. This is why the number of planning permissions generally exceeds the number of actual completions.

Another factor is that the planning consents issued in 2020 represent mainly semi-detached houses and few multi-dwelling units, the latter being the housing type most effective in alleviating the housing shortage. Andreas Ibel, President of the Federal Association of Independent Property and Housing Companies (BFW), argued analogously that the “approval of planning permissions should be expedited particularly in places where residential accommodation is urgently needed, meaning in the metropolises.” He went on to say that, moreover, the focus on the inner cities should be intensified, especially in times of the coronavirus crisis: “If we want to keep our inner cities attractive and vibrant now and going forward, we must make it easier to live there.”

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