Approvals for new-build apartments fall to multi-year low

New-Build Apartment Permits Plummet in Thuringia to Multi-Year Low

Germany's Thuringia is grappling with a significant drop in residential construction approvals, particularly for new-build apartments. As of October 2023, a meager 1,970 permits for fresh apartments have been issued, marking a stark contrast to the 3,900 issued in the same period the previous year. This staggering decrease represents the lowest level of approvals in 13 years, disclosed the State Statistical Office on Monday.

The downtrend extends to single-family homes as well, with around 770 approvals in 2023, a substantial decrease from the 1,400 approvals in 2022. Interestingly, around 1,000 new apartments were granted approval in multi-storey buildings. However, this number represents a decline from 2,000 approvals in 2022.

The price of housing and construction sector challenges may explain the drastic drop, but more insight is needed to draw definitive conclusions. While it's evident that the housing market in Thuringia is experiencing a slowdown, determining the exact cause requires further investigation.

Despite the unfavorable circumstances, some developers strive to move forward with their housing construction projects. For instance, Erfurt witnesses an upcoming residential construction project.

As the demand for affordable housing persists, government authorities should explore solutions to simplify the approval process, foster collaboration between developers, and encourage new residential construction initiatives.

1. While the thriving rental market in some German cities, like Berlin, causes rents to skyrocket, this trend may not be directly linked to the construction approval drop in Thuringia. More specific data and insights regarding the regional situation would be required.
2. Energy policies and climate change concerns dominate the German political landscape, which could impact housing construction in varying ways. Nonetheless, these broader economic and policy contexts do not provide a concrete explanation for the construction approval decline in Thuringia.
3. Many studies, including the one from the University of Chicago, examine the impact of new housing supply on local rent distributions. However, these studies focus more on rental markets and the effects of supply on rent levels, as opposed to providing region-specific details about construction approvals and trends.