German housing crisis: government plans construction boost

The German housing crisis has become a pressing social issue, prompting the government to implement significant measures aimed at increasing affordable housing availability. This initiative is spearheaded by Verena Hubertz, Germany's new Construction and Housing Minister, who emphasizes that "building and housing is the social issue of our time." As part of the 2026 budget proposal presented on July 30, the government is focusing on strategies to alleviate the ongoing housing shortage.

One of the key proposals includes the introduction of a new legislative paragraph, "Bau-Turbo" (construction turbo), that aims to streamline the approval process for construction projects. This regulation will allow municipalities to bypass certain urban planning laws when approving new residential buildings, thereby accelerating the construction timeline. If passed in the fall, this legislation will enable local authorities to approve construction, change-of-use, and renovation projects more efficiently, with automatic approval of planning applications after two months unless opposed by the municipality.

The Construction Ministry projects that these legislative changes could save companies, citizens, and local authorities approximately €2.5 billion ($2.9 billion) annually. However, industry experts like Tim-Oliver Müller from the Federal Association of the German Construction Industry caution that while the new law will facilitate approvals, it will not immediately translate into new housing units. The construction sector is currently grappling with multiple challenges, including rising energy costs, increased material prices due to global events like the war in Ukraine, and inflation rates that have surged from below 1% to between 3% and 4%.

Environmental concerns have also emerged regarding the relaxation of planning regulations. Critics fear that reduced scrutiny may lead to the destruction of green spaces, which are vital for combating urban heat and maintaining ecological balance. Stefan Petzold from the nature conservation organization NABU highlights the importance of preserving these areas for their cooling effects during heatwaves.

Matthias Günther, head of the Pestel Institute, expresses skepticism about the effectiveness of the new legislation, suggesting that it may create additional bureaucracy and delay rather than expedite housing development. He advocates for a comprehensive economic stimulus package for the housing sector, including a loan program with fixed interest rates to encourage construction.

The urgency of addressing the housing crisis is underscored by the dramatic rise in rents across major German cities, where over half of the population lives in rented accommodation—the highest proportion in the European Union. Despite robust tenant protection laws, these measures often hinder mobility, particularly for young families and individuals seeking to relocate.

According to the Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR), Germany requires approximately 320,000 new homes annually until 2030 to meet demand. The previous government aimed for 400,000 new units each year, but by 2024, only 251,900 homes were completed. The new coalition government plans to increase the Construction Ministry's budget to €7.4 billion in 2025, investing in social housing projects, climate-friendly construction, and the conversion of commercial areas to residential use.

This initiative reflects a crucial step towards alleviating the housing crisis while considering sustainable development, as Germany seeks to balance the urgent need for housing with environmental responsibilities.