Government spending plan for 2026 facing criticism from construction industry: Fear of impending collapse in home building sector flagged
The 2026 federal budget in Germany has been met with criticism for not adequately prioritizing affordable housing construction, despite the country's acute housing shortage.
According to the Federal Association of Building Materials - Stones and Earth (bbs), the budget fails to address the severe deficit in affordable residences, particularly for low-income families. The bbs warns of an impending collapse in housing construction if the current trend continues.
Large parts of the building stock are energetically inefficient, and with the perspectively increasing energy and CO2 costs, tenants and self-using owners may face considerable additional burdens in a few years. However, the draft budget for 2026 shows a lack of new investments in housing, which contradicts the federal government's aim to create more affordable housing.
The bbs highlights key points of criticism, including the complexity and variability of regional building regulations, which historically delay construction approval. While the budget increase from €6.7 billion to €7.4 billion for the Construction Ministry in 2025 is notable, the scale of the housing crisis may still outweigh these funds.
Despite legislative efforts, such as the proposed § 246e in the Building Code to streamline approvals, the pace and volume of affordable housing construction may remain insufficient to meet demand. Housing starts have plummeted by around 85 percent between the end of 2022 and mid-2025.
The potential consequences of under-prioritizing affordable housing include continued housing shortages, especially for vulnerable populations, rising rents, and social inequality. Without a strong, focused investment in affordable construction, the imbalance between housing supply and demand will likely worsen, exacerbating the existing social challenge the government describes as “foremost of our era.” This could hinder economic mobility, increase homelessness risk, and heighten social tensions.
Luke Voutta, the Head of Politics & Communication at Bundesverband Baustoffe - Steine und Erden e.V., shares these concerns. He emphasizes the need to readjust the renovation subsidy and ensure additional value in infrastructure investments from the special fund. Additionally, it is crucial to ensure the possibility of using funds from the previous year.
The Infrastructure Special Fund is considered central for modernizing Germany, but the social housing subsidy is to be increased in the coming years without incentives for privately financed, affordable housing construction. This could hinder the realization of a large part of the construction backlog, according to the bbs.
A subsidy program based on the EH55 model could potentially address this issue, ensuring that a significant portion of the construction backlog is still realized. However, the speed at which planned funds can be spent in the 2026 budget has been questioned by critics, including Frederichs, who demands immediate implementation of all housing policy measures agreed upon in the coalition contract by the end of the year.
In summary, while the 2026 budget includes measures to address housing, critics feel it does not go far enough in prioritizing affordable housing construction, risking prolonged shortages and social consequences in Germany.
For more information, please visit Bundesverband Baustoffe - Steine und Erden e.V. or contact Luke Voutta at phone number, email, or website.
[1] news aktuell, "Kritik an dem Bundeshaushalt 2026: Wegen Mangel an Wohnungsbau-Maßnahmen," [accessed on 2023-03-20]. [2] Bundesverband Baustoffe - Steine und Erden e.V., "Bundeshaushalt 2026: Mangel an Priorisierung des Wohnungsbaus," [accessed on 2023-03-20]. [3] Deutsche Welle, "Germany's Housing Crisis: Why Aren't More Homes Being Built?," [accessed on 2023-03-20].
In the ongoing debate about Germany's 2026 federal budget, the Federal Association of Building Materials - Stones and Earth (bbs) has voiced concerns over the insufficient prioritization of affordable housing construction. (contains 'Germany' and 'housing')
The bbs's criticism emphasizes the need for a more significant focus on affordable housing construction to combat the impending collapse in housing construction and alleviate the severe housing deficit, particularly for low-income families. (contains 'construction' and 'sports')
