WIESBADEN (dpa-AFX) – Building permits in Germany rose sharply in the first quarter. In March, 21,800 apartments were approved in old and new buildings, 11.5 percent more than in the same month last year, as the Federal Statistical Office in Wiesbaden announced.
In the first quarter as a whole, 63,500 apartments were approved in new and existing buildings. That was 14.6 percent more than from January to March 2025. In new construction, approvals rose particularly for two-family houses (plus 23.2 percent) and for apartments in multi-family buildings (14.9 percent).
The numbers are a ray of hope in the fight against housing shortages and rising rents, but rising interest rates and costs in the wake of the Iran war threaten to slow down the recovery.
Higher interest rates, increased inflation
“The number of new building permits issued in March shows that the German construction industry showed robust dynamics in the first month of the Iran war,” says Sebastian Dullien, scientific director of the Institute for Macroeconomics and Economic Research at the Hans Böckler Foundation. However, the conflict is likely to noticeably dampen the recovery.
Since the beginning of March, interest rates on 10-year real estate loans have risen by 0.3 percentage points, making housing more expensive. The increased inflation also has an impact. “If people have less purchasing power because of increased energy prices, there is less scope to build a home.” In the medium term, higher fuel and energy costs are also likely to increase construction costs. Even at the current level of building permits, not enough apartments would be built to achieve real relaxation in the housing market.
The Central Association of the German Construction Industry (ZDB) also warned against falling into euphoria. “If we want to cover the country’s needs, we would have to receive at least 10,000 additional permits – per month,” said Managing Director Felix Pakleppa. The Iran war would make supply chains more fragile, financing costs would remain high and the geopolitical situation would unsettle builders and investors. “An approval is not a groundbreaking ceremony and certainly not a finished apartment.”
Housing construction in crisis
Building permits are an important indicator for housing construction, which is in crisis due to increased interest rates and construction costs: What is not approved will not be built later. Affordable living space is scarce, especially in metropolitan areas. The federal government wants to advance housing construction with a “construction turbo” through faster approvals and has reactivated funding programs for energy-efficient construction./als/DP/stk
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