Too much is being built, and too little is being built.

Quite an interesting article:
In Germany, a lot of new housing is being created, but in the wrong locations. According to a construction demand analysis by the Cologne Institute of the German Economy (IW), too many new apartments and single-family homes were built in rural districts between 2011 and 2015. This has led to an increase in vacancies in rural areas – and a worsening housing shortage in cities, the IW reported on Monday.

In the seven largest German cities, only 32 percent of the required apartments were built during the same period, according to the IW. This means that these cities alone are short of 60,000 apartments. The shortage of small apartments is said to be the most severe, according to the study.

For 2016, the authors also expect a further exacerbation of the housing shortage in cities, as the number of completed residential buildings last year "only rose moderately." Even if the framework conditions were to change, i.e., "interest rates rise slightly again and migration to the cities slows down," housing in cities will remain scarce according to the IW. Accordingly, more apartments will continue to be needed there than are built.

The situation is quite different outside metropolitan areas, according to the study. In many rural districts, significantly too much housing was created between 2011 and 2015. In the Lower Saxony district of Emsland, for example, more than 1,060 apartments were built "beyond what was necessary based on demographic development and vacancies."

According to the IW, similar conditions exist in the north German cluster of single-family houses in the Westphalian district of Steinfurt as well as in the district of Vorpommern-Greifswald. Overall, 20 percent more apartments were built in rural districts than needed. For single-family homes, the study indicates this figure is even "more than twice as many."

The authors cite low interest rates as well as the amount of available land as causes. Financing real estate has thus become cheaper and buying it more attractive – although construction costs "have steadily increased." At the same time, "new buildings are preferred over old ones," which leads to new vacancies given the overall declining population in rural areas.

According to the IW, village centers are thus increasingly becoming deserted, while municipal infrastructure costs rise due to sprawl. To avoid further vacancies, the institute advises a rethink in local politics. Despite competition between municipalities, mayors should not designate new building areas and should link new construction to the reduction of vacancies "to make the existing stock more attractive."

At the same time, municipalities with shrinking populations should promote inner development and make their centers more attractive. Support from federal and state governments is also required here, the IW explained.

Overall, the construction of single- and two-family homes is currently declining. The Federal Statistical Office reported on Monday that permits for single-family homes fell by 16 percent from January to April compared to the same period last year, and those for two-family homes by 6.5 percent. Permits for the construction of multi-family houses, on the other hand, rose by 2.5 percent to a total of 51,100 – the highest level in the first four months of a year in 19 years.

My conclusion: If this is true, there will soon be affordable purchase properties in certain rural areas. But city apartments will remain expensive.

The question remains what soon means.

Here, the market is still completely overheated, even in rural areas.
Exorbitant prices are being asked for houses that are 20+ years old. No one should be surprised if people prefer to build new.

What is true is the shortage of city apartments; even the current new construction helps only a little.

That’s nonsense. Why should a mayor stop announcing new building areas if there is demand for it? In our area, there are sometimes up to 10 applicants for one plot. Maybe the municipalities with high vacancy rates should ask themselves why that is the case there. Overall, this only leads to further decline in rural areas if people willing to build are not provided with land.

That’s nonsense. Why should a mayor stop announcing new building areas when there is demand for them? Here we sometimes have up to 10 applicants for one parcel. Perhaps the municipalities with high vacancy rates should ask themselves why that is the case with them.

Overall, this only leads to further desertification in rural areas if people who want to build are not provided with land.

Unfortunately, the people wanting to build are not willing to buy and maintain existing houses. So the demand only comes from the consumer.

Sustainability is often excluded in real estate when weighing up whether to preserve existing buildings or build new ones. Many places consist of houses that become deserted because everyone prefers to have “something new.”

What we shake our heads about in vacation countries in the nearby coastal towns also happens here with us.

We Germans are selfish, wanting our own new front door, but not wanting to sweep in front of it ;)

Best regards in brief

The people willing to build, unfortunately, are not prepared to buy and maintain existing houses. The demand therefore only comes from the consumer.

Sustainability is often excluded when it comes to real estate, when weighing existing buildings versus new construction.
Many places consist of houses that become deserted because everyone prefers to have "new."

What we shake our heads at in holiday countries, in the nearby coastal towns, also happens here.

We Germans are selfish, who want to have their own new front door, but are reluctant to sweep in front of it ;)

Best regards in brief

Why should they? At the prices currently being asked, neither renovation nor demolition is attractive. A full renovation costs at least 120k, and the house hasn't even been purchased yet...

The only solution is for the municipalities to really eliminate vacancies and resell these building plots. This is indeed a significant loss-making business, but it is being seen more and more often now.

Despite the competition between municipalities, mayors should not designate new building areas and should link new construction to a reduction of vacancies "to make the existing stock more attractive."

The existing stock is often not made more attractive, at least in village centers: plots that have become building land without the rearrangement of fields. You can hardly put modern houses on such a three-sided farmyard property. I consider it better from a spatial planning perspective to give up such settlement forms and place new development areas next to them. Baker closed, butcher closed, pub closed, primary school closed. Then a village is dead. It is illusory to believe that this can be revived as a residential area with pigsty expansion premiums. What can be revived are old-new development areas – partially through simple things, like being allowed to give the saddle roof of the settlement house a generous knee wall. In any case, you need young families to revive an area, and you can hardly win them over with a three-quarter-hour bus ride to the nearest daycare. By the way: the economic research institutes are currently in no position to complain about planning errors. Most planning errors are precisely based on their faulty forecasts.