The German government’s ambitious housing construction targets are facing a harsh reality check, according to Housing Minister Verena Hubertz, who cautioned against expecting a rapid turnaround in the severely constrained residential market. Following a disappointing 250,000 completed housing units last year, a figure significantly below projected needs, Hubertz signaled a likely worse outcome for the current year.
Addressing concerns about the slow pace of construction, Hubertz announced a €800 million initiative drawn from a special fund dedicated to infrastructure and climate protection. The program, slated to launch on December 16th, aims to accelerate the realization of planned, yet unrealized, construction projects. While describing the initiative as a “noticeable impulse” Hubertz tempered expectations, acknowledging that immediate, widespread improvement is unlikely.
The initiative prioritizes projects already holding planning permission, recognizing the backlog of potential builds currently stalled due to economic uncertainty and rising construction costs. The program will incentivize efficiency by reinstating support for Energy Efficiency Standard 55 (EH 55), aligning with the government’s focus on sustainable building practices requiring 100% renewable energy sources for heating.
Developers and private individuals holding valid building permits can apply for subsidized loans of up to €100,000 per house or apartment, contingent on the availability of funds. Municipalities are also eligible for a 5% grant to further stimulate local development. This allocation will operate on a “first-come, first-served” basis – a policy decision drawing criticism from some local governments who argue it might disadvantage smaller municipalities with limited administrative capacity to process applications quickly.
The government’s reliance on a ‘windhundprinzip’ (greyhound principle), prioritizing speed over equitable distribution and local considerations, raises questions about the potential for inequitable access to the limited funds. Moreover, the Minister’s inability to provide a timeframe for the funding’s longevity underscores the program’s temporary nature and suggests that deeper, structural reforms are needed to address the underlying causes of Germany’s housing crisis, including regulatory hurdles, material supply chain issues and skilled labor shortages. The viability of this short-term intervention in the face of these systemic challenges remains to be seen.