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Unexpected Rise in Planning Consents

The news communicated by the Federal Statistical Office (Destatis) in mid-March are cause for optimism – in a surprise development, the number of planning consents actually increased in 2019. The construction of 360,600 dwellings was approved, which represents a four percent increase year on year and, for what it’s worth, the highest figure since 2016.

A particularly reassuring piece of news is that the construction of multi-unit dwellings is outpacing the average, because this segment is obviously decisive for addressing the housing shortage in Germany’s conurbations. The planning approval figure for flats in multi-unit dwellings increased by 4.6 percent. The situation is similar for flats that are created by retrofitting existing buildings, whose total increased by more than ten percent after having dropped both in 2017 and 2018. In the major cities, the shortage in development land makes infill densification a key factor for expanding the housing supply.1

Completions Figure to See Modest Rise at Best

However, the completions figures still fall short of the Grand Coalition’s stated goal of ensuring the construction of 1.5 million dwellings before the end of 2021 – not least because, in practice, residential planning approvals are not necessarily followed by actual construction. Recent years have seen the construction backlog swell to enormous proportions, in any case: almost 700,000 flats, while approved, had yet to be completed in 2018.2 Neither is the construction output in 2019 likely to cross the mark of 300,000 completions, according to estimates.3

Moreover, it is still too early to say what short- and medium-term impact on housing construction to expect from the coronavirus pandemic. It could conceivably have an adverse effect on the number of building completions this year, and if this was to be the case it would put additional pressure on housing construction and exacerbate the strain on the housing market in the years ahead.

Accelerated Planning Approval Act is Stalled

The German housing industry has long been waiting for political impulses to stimulate housing construction in effective ways. A year and a half have passed since the housing summit took place in the Chancellery in September 2018 – but while the intervening months have seen plenty of government interventions in landlord-tenant law, precious little was done to boost the development of new residential accommodation.

While having been announced some time ago, the so-called Accelerated Planning Approval Act that is supposed to simplify the planning procedure, and thus to get housing construction up to speed, had not even progressed to the parliamentary consultation stage. Instead, it is still being coordinated between the different cabinet departments.4 So, it remains safe to say that speeding up housing construction does not seem to be among the chief political priorities.