According to a new expert report from 37 economists, cited by the “Handelsblatt”, the imbalance within the German housing market is reportedly hindering economic growth in the country. The Scientific Advisory Board operating within the Federal Ministry of Economics argues that elevated living costs are restricting the mobility of the workforce, especially within high-growth regions, which results in significant economic costs for the entire nation.
Felix Bierbrauer, the chairman of the Advisory Board, explained that when individuals are unable to accept better-paying job opportunities because they cannot secure affordable housing in the local area, the entire economy loses potential opportunities. The experts noted that when an employee is offered a new job that pays 1% better than their current position, they are often simultaneously faced with a 1% increase in local housing expenses in the new area.
To address these structural issues, the Advisory Board advocates primarily for increasing incentives for local municipalities to designate more land for housing development. They point out that current disincentives exist because local governments are currently responsible for absorbing high associated costs, such as the construction of additional schools, childcare centers, sports facilities, and transport links. To alleviate this burden, the board proposes that property owners and developers should be more substantially involved in these costs through an enhanced apportionment of infrastructure expenses.
