MUNICH (dpa-AFX) - According to economists, experts and the construction industry, residential construction in Germany is facing a crisis that will last for years unless the general conditions improve fundamentally. The reason is that the rapid rise in construction costs is also making privately financed residential construction unprofitable for many developers. To recoup the costs, the rent per square meter for a new apartment would currently have to be around 18 euros, estimates the Kiel-based Arbeitsgemeinschaft für zeitgemäßes Bauen (Arge). Housing construction in Germany stands on two feet: Social housing is required by the state, while freely financed housing construction is supposed to be self-supporting.

According to the calculation of the Arge, the nationwide median value for the construction of a square meter of living space - including land costs - was 5148 euros in the first quarter, currently at about 5200 euros.

"Building is simply too expensive," comments Ludwig Dorffmeister, construction and real estate expert at the Munich-based Ifo Institute. "In May, construction prices for conventional new residential construction were 36 percent higher than in the early summer of 2020."

The rise in real estate interest rates is not only hitting private builders, but also housing companies. "In many cases, they are putting projects on hold because the rent that would actually be required for them would financially overburden the subsequent residents," says Dorffmeister.

At the same time, he says, the federal government has severely restricted its new construction requirements since 2022. "Despite the expected adjustment efforts of all parties involved, I do not expect a trend reversal, but rather further severe market losses."/cho/DP/stw