Construction costs are currently skyrocketing

The wave of cancellations in [Öffentliche und Gewerbebau] is just starting, due to the extremely increased costs.

There may certainly also be some regional differences. However, the group of people who still want and above all can finance such high sums is likely to be greatly limited. And the price erosion is unlikely to make the situation any easier.

As one hears, there has never been such a strong and sudden slump in construction before. At least no one can remember it.

An acquaintance in the [Raum Nürnberg] has had his semi-detached house listed online for just under 700k for 3 months. So far, no inquiries from interested parties. It was built in 1996 with a gas heating system. There are long faces at the moment. Just a few months ago, the house would probably have been sold in a bidding process within a few days.

When I look around our immediate vicinity, I notice that many scaffolds are erected on older houses. Everywhere there is energy-efficient renovation... many changes of ownership, insulation being installed, new windows, roofs, photovoltaics... going in the right direction

Yes, and that does not contradict the observations in the shell construction sector at all.

The public and industrial sectors plan much more long-term anyway. Recently, planning for a school involved only point-to-point cabling for all sensors in the classrooms. Private individuals would build a bus system; the state says: "It has such a long lifespan, how am I supposed to know if anyone will still supply something for this bus in 30 years." So copper goes into the walls without end. Budget? Doesn’t matter.

But for the shell builders, that is not much work. They can at most do renovation now, and in this area there is enough work for the next few decades.

So now it is July, let's gladly look at the end of the year to see whether construction prices really collapse as partly predicted here. I don't believe in that.

The politically demanded 400,000 new apartments, targeted annually, cannot be achieved. Maybe half of that will be managed with great difficulty.

For this reason alone, there will be an even more severe housing shortage. In fact, the new heating law leads to further increases in construction costs.

The construction of an apartment in a multi-family house today costs around 300,000 euros. To build cost-neutrally here, a net cold rent of 18 euros per square meter must be generated. So far, housing companies have calculated costs of 230,000 euros and then 11 euros NKM. The problem is that no one can pay this 18 euro cold rent per sqm anymore. Therefore, no new construction is planned at current prices.

However, when one hears that 1.5 million people immigrated to Germany in 2022, resulting in net population growth, one sees the dramatic nature of the figures. Similar numbers are expected for this year.

Housing shortage ahead! Exploding rents ahead!

What would help here? Experts suggest lowering the property transfer tax. I think little of that. It will bring nothing in the short term.

In my opinion, it only works if many small landlords are strengthened and additional housing is created with tax incentives.
By burdening landlords with the costs of the heating and energy transition, nothing will come of it. Rather, the opposite will happen.

How about requiring the construction of one or more granny flats when building a single-family house and renting them out, as part of the building permit? Of course combined with subsidies and tax components.

I myself, as a landlord, just had to pay a not insignificant sum of taxes. I cannot build reserves. Investments can only be offset through depreciation. Where is the money for new investments supposed to come from? I could still convert an attic and thus create 4 more apartments. My capital for this now partly lies with the tax office. I like to pay taxes, but it must remain within reasonable limits.

The planned installation of heat pumps alone will consume the entire investment capital of the large housing companies.
There is no money left for anything else. Incidentally, not even for new housing construction.

And again. There are still demolition premiums from the state and demolition continues unabated. Without replacement new buildings.

1.12 million more people in 2022, but only just under 80k more in 2021. You cannot simply assume +1.5 million more population. People also move away, die, are born.

The construction of an apartment in a multi-family house today costs around 300,000 euros. To build cost-neutrally here, a net cold rent of 18 euros must be achieved. So far, housing companies calculated with costs of 230,000 euros and then 11 euros NKM. The problem is, no one can pay these 18 euros cold rent per sqm anymore. So no new construction is planned at current prices anymore.

How did you calculate the numbers? Oh right, they are just quoted from the press ==> then please say so as well. I can tell you that the 18€/sqm cold rent is nonsense. But it is correct that affordable housing is not possible with the current construction costs – at best in the middle of nowhere with cheap land.

How about requiring the construction of one or more granny flats when building a single-family house and renting them out? As part of the building permit, of course. Naturally combined with subsidies and tax components.

That will ultimately suppress the demand for single-family houses. Living alone is a major reason for building. About 2/3 of all new apartments in Germany are single-family houses (meaning: one apartment in the house).

There are many ways to create living space. Today one person has about 37% more living space than 30 years ago ==> build smaller apartments, they are not that expensive. But tenants don’t want that either.
Abolish VAT on construction services. Makes building directly affordable without much effort. But the state does not want that (housing companies have been demanding it for years).
Abolish real estate transfer tax? Interesting for single-family/two-family houses. For multi-family houses this position does not make much difference in the total investment costs. Can be neglected.

I got the numbers from a housing economist who said it in an interview on DLF. Somewhere shortly after half past one. You can certainly find the piece in the DLF media library.

With ever new requirements such as the extended heating cost billing, legionella tests, smoke detectors, radio reading devices, smart meters, energy performance certificates, documentation obligations, the upcoming cost cap for heating renovations at only 50 cents per square meter, and who knows what else, the indirect costs are driven up so much that new construction or expansion simply no longer makes sense for many landlords.

I cannot and do not want to burden the tenant with ever-increasing costs, and I cannot pass on everything. Because in the end, I am the landlord who has to present a single 85-year-old retiree with a 1200 euro additional service charge bill, not Mr. Habeck. Because then I have to tell her she does not need to pay it before she has to resort to collecting bottles.

But even for something like that, a German tax office has no understanding.

The state should consider carefully whether and how it increases landlords’ motivation or whether it completely drives the cart into the wall with ever new restrictions. Not everyone living here has as much goodwill and patience as the German citizen who has been living here longer. A look at the neighboring country is enough to see how quickly it can become very uncomfortable here, too.