Fall in German home building permits picks up pace
4:04 am Thursday, July 18th, 2024
By Tom Sims and Klaus Lauer
FRANKFURT (Reuters) -Building permits for apartments in Germany fell 24% in May from a year earlier, Statistics Office data showed on Thursday, highlighting a continued downturn in demand in the construction and real estate industry.
Germany’s property sector, in its third year of decline, is undergoing its most severe slump in decades. Permits are an important indicator of future construction activity.
Around 17,800 permits were issued, which is 24% fewer than a year earlier, the data showed, steeper than the previous month’s 17% fall and making for a 44% drop over the past two years.
The figures follow data this week that construction is contracting further, with new building starts falling 26% in the first half of the year, coming on top of previous steep declines.
Last week, one of the nation’s biggest landlords, Vonovia CEO Rolf Buch, predicted that more property companies would go bust.
“Building permits in Germany continue to go in only one direction: down,” said Felix Pakleppa, head of the Central Association of the German Construction Industry.
“You don’t need a degree in statistics to realize that Germany is slipping into a deep housing crisis.”
For years, low interest rates and a strong economy sustained a boom across the German property sector, but that boom ended in 2022 when rampant inflation forced the European Central Bank to swiftly raise borrowing costs.
Real-estate financing dried up, deals fizzled, projects stalled, and major developers went bust.
(Reporting by Tom Sims and Klaus LauerEditing by Madeline Chambers and Emelia Sithole-Matarise)
