German housing permits rise sharply in first two months of year

The number of newly approved homes in Germany rose significantly in the first two months of the year, though the industry cautioned that higher costs and geopolitical risks could weigh on construction activity.

A total of 41,700 housing units were approved in January and February, an increase of 16.2% compared with the same period last year, the Federal Statistical Office said on Friday.

In February alone, approvals jumped 24.1% year-on-year to 22,200 units. Of these, around 19,000 are planned in new buildings, while the remainder would be created within existing structures.

The German Construction Industry Federation (HDB) expressed cautious optimism that the uptick could signal a broader recovery in residential building, but warned of mounting risks linked to the US-Israeli war with Iran.

In addition to elevated interest rates, costs for energy-intensive materials and fuel have already begun to rise, it said.