German Housing Construction Faces Crisis Despite Signs of Recovery

The DIW forecasts a modest rebound in construction by 2026, but severe housing shortages and high costs persist.

The DIW predicts a 2% growth in Germany's inflation-adjusted construction volume by 2026 after five consecutive years of decline.
Housing construction remains critically low, with 2026 levels expected to be 25% below 2021 figures, exacerbating urban housing shortages.
High interest rates and soaring construction costs have deterred households from new projects, while economic stagnation slows commercial construction.
Government measures like tax incentives and cost-reduction efforts show early progress but are insufficient to address the acute housing crisis.
The DIW calls for urgent social housing programs to combat rising rents and bridge the gap between housing demand and supply.