Overview
- The Ifo‑Institut now projects only about 185,000 completed dwellings for 2026, the lowest annual output in 15 years and far below the federal goal of 320,000–400,000 units.
- The institute also downgraded its medium‑term outlook, expecting roughly 195,000 completions in both 2027 and 2028, reversing earlier hopes of a recovery.
- Local indicators show the shortfall on the ground: an IVD analysis found Munich building permits fell about 25% year‑on‑year, to 5,366 units, signaling fewer apartments will reach the market in coming years.
- Ifo and industry experts identify three main drivers since 2022 — a price shock in construction services, a sharp rise in financing costs, and a big reduction in public building subsidies — that together block many projects from being built at affordable rents.
- Policy responses such as the 2025 'Bau‑Turbo' speed approvals but do not fix costs or financing; proposed fixes include simpler building standards, serial prefabrication and cheaper land, yet these changes need legal and political backing and would take time to raise affordable supply.