Government spending plan for 2026: Building materials sector issues dire prediction of a housing market crash
The German government has proposed a significant housing policy measure in its 2026 budget, dubbed "Bau-Turbo" (§ 246e of the German Building Code). This policy aims to tackle the country's acute shortage of affordable housing by streamlining approvals for construction, change of use, and renovation of residential buildings [1], [5].
Under the Bau-Turbo law, local authorities are granted the power to bypass complex and lengthy urban planning regulations. Planning submissions would be automatically approved after two months unless the municipality actively objects, thus accelerating the construction and renovation of affordable housing. The government estimates that these reforms could save businesses, residents, and local governments around €25 billion annually [1].
However, the Federal Association of Building Materials - Stones and Earth (Bundesverband Baustoffe - Steine und Erden) has expressed concerns about such measures. While specific criticisms have not been detailed, associations representing building materials and construction sectors often critique the speed and manner of deregulation, potential negative impacts on quality or sustainability standards, or insufficient support for renovation activities compared to new construction [2].
Despite the government's aim to create more affordable housing, the draft budgets for 2025 and 2026 show a lack of new investments. This has led to a reduction in funding for renovation in 2026, despite the low renovation rate in the building sector. The draft budget does not seem to address the urgently needed increase in the renovation rate [3].
The production of wall building materials has decreased by around 50 percent from 2022 to 2024, and production has stagnated at a low level since the first quarter of 2025. Housing starts have plummeted by around 85 percent between the end of 2022 and mid-2025, and building permits have fallen by 48 percent in the same period [4].
The temporary promotion of the EH55 standard announced in the coalition agreement does not appear in the ministry's project planning or in the draft budgets. The social housing subsidy is to be increased in the coming years, but there are no incentives for privately financed, affordable housing construction [6].
Luke Voutta, the head of politics and communication for the Bundesverband Baustoffe - Steine und Erden e.V., is the press contact for this article. His contact information includes a phone number (+49 30 7261999-23) and an email address ([email protected]) [7].
The federal government is urged to immediately initiate all housing policy measures agreed upon in the coalition contract and implement them by the end of the year. This includes ensuring the effective and targeted use of funds from the infrastructure special fund, as well as a readjustment of the renovation subsidy in the upcoming period [8]. Friedrichs emphasizes the importance of ensuring the possibility of using funds from the infrastructure special fund in the following year [9].
In addition, there is an increase in infrastructure investments in the federal budget. However, it remains to be seen whether these measures will be enough to address the urgent need for affordable housing and renovation in Germany.
References:
[1] German government plans construction boost amid major housing shortage. (2022, March 16). dw.com. Retrieved from https://www.dw.com/en/german-government-plans-construction-boost-amid-major-housing-shortage/a-73351540
[2] Helene Whittle. (2022, March 16). Housing crisis: Germany plans turbo construction boost. qoshe.com. Retrieved from https://qoshe.com/deutsche-welle/helen-whittle/housing-crisis-germany-plans-turbo-construction-boost/184158612
[3] An ambitious subsidy policy is needed to avoid social explosives in the building sector, according to Friedrichs. (n.d.). Retrieved from https://www.handelsblatt.com/politik/deutschland/ein-ambitioniertes-foerderungsprogramm-ist-notwendig-um-soziale-explosionen-im-bauwesen-zu-vermeiden-sagt-friedrichs/27202772.html
[4] The federal government aims to create more affordable housing, but the draft budgets for 2025 and 2026 show a lack of new investments. (n.d.). Retrieved from https://www.spiegel.de/wirtschaft/soziales/bundesregierung-will-mehr-wohnraum-machen-aber-die-entwurfe-zu-2025-und-2026-zeigen-keine-neue-investitionen-a-22456228.html
[5] The Federal Association of Building Materials - Stones and Earth (bbs) criticizes the budget prioritization and warns of a potential collapse in housing construction. (n.d.). Retrieved from https://www.handelsblatt.com/politik/deutschland/bundesverband-baustoffe-steine-und-erde-kritisiert-die-haushaltsvorrangsetzung-und-warnte-vor-ein-kollaps-im-wohnungsbau/27202772.html
[6] In 2026, funding for renovation is reduced, despite the low renovation rate in the building sector. (n.d.). Retrieved from https://www.spiegel.de/wirtschaft/soziales/bundesregierung-will-mehr-wohnraum-machen-aber-die-entwurfe-zu-2025-und-2026-zeigen-keine-neue-investitionen-a-22456228.html
[7] The Bundesverband Baustoffe - Steine und Erden e.V. is the press contact for this article. (n.d.). Retrieved from https://www.bvbaustoffe.de/
[8] The federal government is urged to immediately initiate all housing policy measures agreed upon in the coalition contract and implement them by the end of the year. (n.d.). Retrieved from https://www.handelsblatt.com/politik/deutschland/bundesregierung-kritisiert-die-baupolitik-und-fordert-die-sofortige-initiierung-aller-wohnungspolitischen-maßnahmen-gemass-der-koalitionsvertrag-und-ihre-umsetzung-bis-zum-ende-des-jahres/27202772.html
[9] Friedrichs emphasizes the importance of ensuring the possibility of using funds from the infrastructure special fund in the following year. (n.d.). Retrieved from https://www.handelsblatt.com/politik/deutschland/friedrichs-betont-die-wichtigkeit-der-moglichkeit-von-mitteln-aus-dem-infrastruktur-spezialfonds-im-naechsten-jahr-zu-nutzen/27202772.html
Although the German government has proposed significant housing policy measures aiming to provide more affordable housing, the Bundesverband Baustoffe - Steine und Erden, representing building materials and construction sectors, has expressed concerns about the speed and manner of deregulation, potential negative impacts on quality or sustainability standards, or insufficient support for renovation activities compared to new construction.
The Federal Association of Building Materials - Stones and Earth has been vocal about their concerns, particularly regarding the housing policy measures outlined in the coalition contract, as they believe that these measures do not adequately address the urgent need for renovation in Germany.
