New residential construction in the crisis: Why affordable housing is becoming the exception - and what political levers exist

The lack of affordable housing is one of the key social challenges of our time. The situation has worsened dramatically in recent years, particularly in major German cities and conurbations. While demand for housing is constantly growing, new construction is barely keeping pace. Experts from the construction industry, housing sector and economy are now painting an increasingly bleak picture: new residential construction is stagnating - and with it the opportunity to relieve the market.

Exploding costs instead of growing living space

The causes of this development lie less in the lack of building land or qualified workers than in a complex network of cost factors that are making building in Germany increasingly unattractive. In addition to increased material prices and higher financing costs, it is above all legal requirements and technical standards that are having a massive impact on construction costs.

Studies by the Federal Statistical Office show that construction prices for residential buildings have risen significantly in just a few years. New-build apartments are now reaching costs that make economically viable rents almost impossible - especially in the price-controlled or mid-range segment. As a result, even investors and municipal housing associations are coming under increasing pressure.

Regulatory density as a price driver

One point of criticism frequently voiced by practitioners is the exceptionally high level of regulation in construction. The spectrum of requirements ranges from energy efficiency, sound insulation and fire protection to detailed technical standards. Representatives of the construction industry have long pointed out that although many of these standards are well-intentioned, in their entirety they are cost-intensive and sometimes contradictory.

Analyses from research and associations have repeatedly come to the conclusion that DIN standards and technical specifications in particular account for a significant proportion of construction costs. Every additional standard increases planning costs, material usage and execution risks. The result: projects are postponed, scaled down or abandoned altogether.

Dramatically falling completion figures

The effects are clearly reflected in new construction figures. Industry analysts expect the number of completed apartments to fall further in the coming years. Germany is already falling far short of actual demand, which is mainly due to population growth in cities, migration and changes in household structures.

Housing economists - including those from the German Economic Institute - warn that construction activity reacts to political decisions with a time lag. A drop in building permits today means a lack of apartments in several years' time. This will exacerbate the shortage even if new measures are adopted in the short term.

Political initiatives with limited effect

In recent years, politicians have announced numerous initiatives to speed up housing construction - from simplified approval procedures to subsidy programs. In practice, however, these measures have been slow to take effect in many places. Local authorities continue to struggle with long processing times, while funding conditions are often criticized for being too complex or too short-lived.

A central reform approach is the so-called "building type E" - the "E" stands for "simple". The idea behind it: Building owners should no longer necessarily have to meet every technically possible maximum standard, but should be allowed to limit themselves to functional, proven solutions. The aim is to reduce costs without fundamentally compromising safety or quality of living.

Legal uncertainty inhibits innovation

So far, however, many project developers have shied away from this approach. The reason lies in German liability and warranty law, which effectively presupposes the highest state of the art. Those who deviate from this risk legal disputes. Innovation is thus not rewarded, but punished - a situation that many experts describe as counterproductive.

International comparisons show that other European countries are also creating high-quality and durable living space with significantly lower technical requirements. Germany's special approach is increasingly proving to be a cost driver without proportional added value.

Looking to the past as a solution

A look into the past shows that there is another way. Germany was already facing a massive housing shortage in the 1990s. Back then, politicians responded with temporary special regulations, simplified building regulations and accelerated procedures. Housing construction picked up quickly - not least because pragmatic solutions took precedence over perfection.

Many of these regulations still formally exist, but are no longer in force. Experts from the construction industry are therefore calling for these instruments to be reactivated - at least temporarily. This could provide short-term impetus to make projects economically viable again.

Responsibility and scope for political action

The discussion about new residential construction shows: The problem is less technical than political. The possibilities for action are there, the will to reform is decisive. Representatives of the German government are also signaling a willingness to reform - including the current Minister of Construction, Verena Hubertz, who has repeatedly spoken out in favour of simpler construction methods.

However, it remains to be seen whether and how quickly this will result in concrete legal changes. Time is a decisive factor for the construction industry: every month lost further exacerbates the housing shortage and drives up prices and rents.

Conclusion: Affordable construction is possible - if the framework is right

The virtual standstill in new residential construction is not a law of nature. It is the result of political decisions, regulatory overload and a lack of prioritization of practical solutions. A temporary lowering of standards, legal clarity for simpler construction and more efficient approval procedures could provide short-term relief.

Whether politicians have the courage to take these steps will be decisive in determining whether housing in German cities becomes affordable again in the future - or finally becomes a luxury good.