A persistent shortage of housing is expected to continue in Germany well into the 2030s, according to a recent assessment by the Ifo Institute. Ludwig Dorffmeister, a construction expert at the institute, indicated that the current dynamics of the housing market are unlikely to shift significantly in the medium term. He projects that the situation will remain considerably strained for at least the next decade.
Forecasts suggest the completion of approximately 205,000 new residential units this year. However, the number is predicted to decline to around 185,000 by 2026, representing the lowest figure observed since 2009. Projections for 2027 anticipate 190,000 completions, with 195,000 expected in 2028.
The scarcity is largely attributable to elevated construction costs, which have discouraged new developments and reduced the issuance of building permits. Dorffmeister explained that many construction projects have become financially unviable due to these increased costs. He further noted that regulatory constraints on rental prices also contribute to the diminished attractiveness of housing development for builders.
