Germany’s housing construction sector still caught in ‘pincer grip’

Permits for new and renovated apartments reached 110,000 in the first six months of the year, a 2.9% increase compared to the same period in 2024. Approvals for June alone rose by 7.9%. However, the German Construction Industry Federation (Bauindustrie) said the headline figures masked a mixed picture across housing segments.

Single-family home permits increased by 14.1% year-on-year to 21,300 units, while two-family homes declined by 8.3% to 6,000 units. Permits for apartments in multi-family buildings, regarded as the most important segment for housing supply, stabilised at 57,300 units (+0.1%). This followed a cumulative fall of more than 40% between 2021 and 2024.

“Despite high demand, housing construction has not yet picked up, constrained by the pincer grip of continued high interest rates and construction costs,” said Bauindustrie managing director Tim-Oliver Müller.

Müller welcomed the new federal government’s “construction boost” initiative to accelerate municipal development plans but warned that further action was needed in the second half of 2025 to deliver on the coalition’s housing pledges. Measures should include reducing regulation and bureaucracy, improving funding conditions, and simplifying planning and approval procedures, he said.

The availability of building land was also highlighted as a structural barrier. Bauindustrie noted that sales in Germany’s seven largest cities had fallen from 5.85m sq m in 2011 to 1.63m sq m in 2024, driving up land costs and constraining housing supply.