BERLIN — The urgency surrounding affordable housing in Germany has reached critical levels, highlighted by recent research indicating that the nation needs 320,000 new apartments every year to adequately meet demand. This alarm was raised by Matthias Waltersbacher of the Federal Institute for Research on Building, Urban Affairs and Spatial Development, during a presentation on March 20, 2025. Notably, despite projections suggesting that the population in Germany will remain largely stable until 2030, the demand for housing, particularly in major urban centers, continues to soar.
The greatest needs lie in the "Big Seven" German cities — Berlin, Munich, Hamburg, Cologne, Frankfurt, Düsseldorf, and Stuttgart — where approximately 60,000 new apartments must be added annually to cover about one-fifth of national demand. "We expect that the population in Germany will largely remain stable until the year 2030," Waltersbacher noted during the results presentation, emphasizing the period of study from 2023 to 2030.
However, the picture painted by the German Property Federation (ZIA) is even bleaker. They assert that the country may require upwards of 600,000 apartments in 2025 alone, doubling the government's forecasts. Gunther Adler, ZIA's deputy managing director, conveyed the urgency of the situation, stating, "The ZIA assumes that the situation is even more serious," referencing declining new construction figures alongside rising housing demand. Meanwhile, the German government set a goal to build 400,000 apartments each year, with a quarter designated as social housing. Yet, the most recent estimates suggest only about 265,000 apartments were delivered in 2024, falling significantly short of expectations.
As the housing crisis deepens, key players in the sector, including the DGB (German Trade Union Confederation) and the German Tenants' Association, are calling for immediate action. In an open letter dated March 19, 2025, the organizations urged the coalition ahead of the formation of the new government to prioritize decisive measures for a social and equitable housing policy. They advocate for extending the rental price brake, punishing rental profiteering, and imposing stricter regulations on short-term leases.
Additionally, the DGB and Mieterbund are proposing a significant national housing initiative requiring an investment of 12.5 billion euros per year from federal and state governments, to facilitate the construction of at least 100,000 new social housing units annually. "Housing must not be a luxury; it is a fundamental right for all. Therefore, affordable living must be a priority in coalition negotiations," emphasized DGB board member Stefan Körzell in remarks to the RedaktionsNetzwerk Deutschland (RND).
They argue that, alongside legal reforms, a solid investment program exempt from the debt brake is necessary to provide affordable housing solutions that will alleviate the current crisis. Furthermore, proposals include a “conversion brake” against the transformation of rental units into condominiums and a nationwide ban on misusing properties for short-term rentals, which exacerbate the shortage.
In the meantime, there is a glimmer of hope as new statistics released show a 6.9% increase in building permits issued in January 2025 compared to January 2024, substantiating the possibility of a turnaround in the construction industry.
Rolf Buch, CEO of Vonovia, Germany's largest housing company, expressed optimism on March 19, 2025, stating, "We are coming out of the crisis sooner than many others, and we are emerging stronger than when we entered it." His company plans to resume construction projects in 2025, indicating a potential upturn in the housing market.
However, the challenges remain daunting. The lending intermediary Interhyp reported a surge in mortgage rates, with average interest for a ten-year fixed mortgage floating around 3.7%. This spike in borrowing costs poses additional hurdles for potential homeowners seeking affordability in a fragmented market.
As Germany confronts its housing crisis, the dual pressures of rising demand and stagnating supply make it essential for the next government to not only acknowledge the plight of tenants but to act decisively to implement solutions that ensure affordable housing remains accessible to all citizens. The urgency is not just a matter of policy but a fundamental question of rights and dignity in urban living.
