Addressing the years of stagnation in new construction across Germany, housing economist Matthias Günther of the Pestel Institute has called for the reintroduction of the Baukindergeld, or construction allowance. Speaking to the “Rheinische Post”, Günther described the program as a genuine success story that was regrettably discontinued in 2021. He views its reinstatement as a beneficial measure.
The Baukindergeld was previously a state subsidy managed by the KfW (the German development bank) designed to assist families with children, up to a certain income level, when purchasing or building owner-occupied homes. According to Günther, an evaluation showed that the government recovered three Euros for every subsidized Euro spent because construction increased, and that the program successfully reached low-income households who tended to purchase more affordable housing. He stressed that this is precisely what the market requires.
Conversely, Günther criticized the Social Democratic Party’s (SPD) proposal to establish a state-owned housing company open to external investments. He argued that this concept was flawed because outside investors inherently demand a return on investment. “It makes no sense to create a state company intended to serve external investors if the goal is to keep rents affordable” he stated. Instead, he suggested a more practical alternative: the state should take over an existing firm, such as Vonovia.
