New construction of apartments in North Rhine-Westphalia decreasing - Increase in Residential Construction Projects Completed in North Rhine-Westphalia
In North Rhine-Westphalia, the construction of new apartments plunged last year, according to the State Statistical Office (IT.NRW). A total of 41,025 apartments were completed, including renovations, marking a decline of 14.8% from 2023, with 7,123 fewer apartments constructed.
The decrease was considerably steeper for single and two-family houses, with single-family home construction falling by nearly a quarter to approximately 7,370 units. Furthermore, the number of new buildings with two apartments decreased by 720 to around 2,580.
In terms of multi-family houses with three or more apartments, the drop was 18.9%. About 22,470 apartments were completed in this category, a decrease of 5,238 from 2023. Conversely, the number of apartments created through renovations or extensions rose by 950 to 5,990.
The decline in new apartment construction, as noted by IT.NRW, can be attributed to a decrease in building permits issued, which have dropped by 34.4% over the past five years. Last year, 40,554 apartments were approved, whereas in 2021, the figure stood at 61,849. Building permits serve as an important indicator of future construction activities as they represent planned construction projects.
Similarly, nationwide, the number of new apartments also declined by around 14% last year. The Federal Statistical Office reported 251,900 apartments completed in Germany, 42,500 fewer than the previous year, signifying the lowest level since 2015.
The prolonged construction slowdown is primarily due to significantly increased interest rates and construction costs. Many developers have put new building projects on hold, and investors have become hesitant due to the lack of profitability. Experts estimate that Germany is facing a shortage of hundreds of thousands of apartments. Federal Chancellor Friedrich Merz (CDU) recently estimated the shortage at "500,000 and more."
The new Federal Minister of Housing, Verena Hubertz (SPD), has promised to initiate a "housing construction turbo" in her first 100 days in office. Hubertz criticized the complex and time-consuming approval procedures, high construction costs, and opaque funding conditions. "The excavators must roll again, and we must build, build, build," Hubertz declared, emphasizing the need for affordable housing.
Enrichment Data
The construction crisis in North Rhine-Westphalia can be largely attributed to the combined effects of soaring interest rates, rising construction costs, structural inefficiencies such as fragmented regulations and sluggish bureaucratic approvals, and regulatory and systemic inefficiencies that complicate the construction landscape. Together, these factors have created a crisis in construction, severely limiting housing development in the region.
The community policy in North Rhine-Westphalia, aiming to address the construction crisis, might need to consider revising employment policies related to the construction sector, as the prolonged slowdown is largely due to increased interest rates and construction costs affecting developers. This could involve attracting more investors, streamlining bureaucratic approvals, and reducing regulatory inefficiencies to encourage housing development and combat the estimated shortage of hundreds of thousands of apartments.
In light of the finance ministry's responsibility for managing the country's economy, it would be essential for them to implement business strategies that prioritize housing development, addressing the factors contributing to the construction crisis. This could lead to the creation of more affordable housing and contribute to the stabilization and growth of the regional economy.
