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Any Policy Seeking to Raise Germany’s Homeownership Rate Presupposes an Increase in Planning Permits

Rumour has it that new plans are on the table to stimulate Germany’s flatlining homeownership rate. At least some sections of the body politic seem to have realised that the German ratio of owner-occupied homes, which is far too low when compared to other countries, is harmful both in societal and macro-economic terms. Accordingly, policymakers have resolved to seek an increase in the homeownership rate in the coming years.

For the time being, the German homeownership rate is 47.6 percent. More than half of all Germans rent their premises. This compares to an EU average of 70 percent of residents who own their homes outright. In the years ahead, as word has it, a variety of sponsorship programs are to boost the ownership rate in Germany at a pace of one percent annually. The medium-term goal is to bring the population’s share of homeowners up to nearly 60 percent.

The thing is, the target of an elevated homeownership rate could be achieved even now, and without extra funding, while simultaneously addressing the keen demand for housing. All that needs to be done is step up housing construction. To pave the way for increased development, the number of planning permissions issued should be expanded as swiftly as possible.

But this is precisely where everything stalls. The figures published by the Federal Statistical Office for the first four months of 2017 paint a sobering picture as far as the number of issued planning consents goes. They suggest that a total of 106,500 new residential units were approved in Germany between January and April 2017 – a year-on-year decline by more than 10,000 flats. You could be forgiven for thinking there is a manifest conflict of interest here considering the much-touted intention to raise the homeownership rate.