Building Permits in Germany Rise Again – Shortfall of Around One Million Homes Remains

Despite rising permits, the supply gap on the German housing market remains significant. According to estimates, around one million homes are missing, particularly in major cities and metropolitan areas. The total housing stock in Germany amounts to 44.0 million apartments, with average per capita living space of 49.5 square meters. Over the past ten years, the number of apartments has also risen significantly more than the population.

Completions at a low

Actual construction completions continue to lag behind permits. In 2025, only 206,600 apartments were completed in Germany, a decline of 18 percent compared to the previous year. This marked the lowest figure since 2012. Felix Pakleppa, Chief Executive of the Zentralverband Deutsches Baugewerbe (ZDB), commented: "Ob aber die Bauherren den Bau umsetzen, machen sie abhängig von den Kosten... Material, Energie und Finanzierung verteuern sich gleichzeitig".

Lapsed permits and rising prices

Another problem is lapsed permits. According to the ZDB, more than 35,000 building permits expired in the past year alone – more than at any time in over 20 years. The main reason cited is increased financing costs. In addition, construction prices are rising: in May 2026, new-build prices for residential buildings were five percent above the previous year's level. The discrepancy between approval and actual construction start has thus widened further, according to the industry.

Federal government aims to boost construction

The federal government has reactivated several programs in recent months to stimulate residential construction. These include funding programs for energy-efficient building as well as the so-called "Bau-Turbo," which is intended to accelerate the construction of new apartments through faster approval procedures. A fundamental reorganization of KfW funding is planned by the federal government for 2027. This is intended to create "Klarheit über die Höhe und die Konditionen für die Neuordnung der KfW-Förderung im Jahr 2027" for investors.

Construction industry demands

The construction industry is meanwhile calling for further political measures. The ZDB advocates a special AfA (depreciation allowance) linked to the EH-55 standard rather than the stricter EH-40 standard. "Zusätzlichen Schwung brächte eine Sonder-AfA, die endlich an den EH-55-Standard gekoppelt wird statt an EH-40," according to a statement from the association. In addition, the EH-55 standard, which is sufficient for home ownership promotion, should apply all the more so to rental housing construction.

The association also criticizes the current conditions of KfW funding. Interest rates in the EH-55 program remain too high and, above all, too volatile. In addition, existing funding in the EH-55 program only runs until the end of 2026. The ZDB is therefore calling for reliable, multi-year structuring of the funding. The "Gebäudetyp E" initiative to reduce construction costs must also finally be implemented by the federal government: "Ein wichtiger Hebel, um die Baukosten zu senken, ist der Gebäudetyp E - hier muss die Bundesregierung endlich liefern".

Outlook

The Zentralverband Deutsches Baugewerbe is headquartered in Berlin and represents the medium-sized construction industry in Germany. The association's press contact is Kronenstraße 55-58 in 10117 Berlin. The May figures on building permits were published by the Federal Statistical Office and distributed to media outlets via the dpa news channel.

Overall, it is clear that the recovery in permits is not yet feeding through to completions to a sufficient degree. While the pipeline of approved projects is growing, the hurdles for developers remain high – from increased material and energy costs to volatile financing conditions and uncertain funding frameworks. The coming months will show whether political measures and the renewed rise in permits can actually lead to a turnaround in completions.