Permits for new housing in Germany up 1.9% in July

Permits for the construction of a total of 22,500 new flats were granted in Germany in July, up 1.9% year-on-year, official figures showed on Friday, in an encouraging sign for the housing market.

The July figures confirm the positive trend seen in the first six months as a whole, when building permits rose by just over 15% – the strongest increase for a first half of the year seen since 2016.

Germany is estimated to be short of around 1 million homes. Construction often takes place in rural areas, while in urban centres demand far outstrips supply.

From January to July, permits were granted for 148,800 units in new and existing buildings, according to the Federal Statistical Office, an increase of just under 13%, or 17,000 units, compared with the same period last year.

Permits for new single-family homes rose by almost 10% to 27,900.

Authorities also approved 79,700 units in blocks of flats, the largest category, up more than 15% from the same period last year.

The figures are in line with observations by economic experts, with the leading ifo Institute think tank recently noting that sentiment in the residential construction sector has improved.

"Companies are increasingly seeing light at the end of the tunnel," the institute said, adding that "the rise in building permits is fuelling hopes that the order situation will pick up in the coming months."

Sebastian Dullien, research director at the Macroeconomic Policy Institute at the Hans Böckler Foundation, cautioned, however, that rising energy costs and higher mortgage rates could dampen the positive development.