German housing approvals fall, need to stimulate the industry.

The statistics office disclosed data showing that the number of building permits for residential apartments in Germany fell by 31.5% in July compared to a year ago. This underscores the downturn in demand that has engulfed the construction and real estate industries. The drop in permits comes as companies call for incentives from Berlin to support the industry ahead of next week's meeting with Chancellor Olaf Scholz.

The statistics office attributes the drop in demand to high construction costs and difficulties in obtaining finance, which only exacerbates the problems in the broad sector. Building permits were issued for 21,000 apartments in July, down 9,600 from a year earlier.

Germany aims to build 400,000 apartments a year, but faces a challenge to reach this target. For years, low interest rates have fueled a global boom, attracting interest in German real estate, seen as safe and stable compared to other countries. However, a sharp rise in interest rates has put an end to this boom, causing a number of real estate developers to go bankrupt as deals freeze and prices fall.

Tim-Oliver Muller, head of the German Federal Association of the Construction Industry, is pushing for an emergency package from the government that includes a cut in the tax on property sales and an expansion of a low-interest loan program to support new home construction.

"The free fall in building permits continues. Unless the federal government takes decisive action at next week's future housing meeting, a housing crisis in Germany will be inevitable," he said.

The decline in demand for one- and two-family homes in the first seven months of the year was even steeper, falling 37% and 53% respectively.

Source:

Reuters.