German construction permits show big gains in August

Building permits in Germany rose significantly again in August, offering a glimmer of hope for the struggling residential construction sector, the Federal Statistical Office in Wiesbaden reported on Friday.

A total of 20,600 homes were approved, 6.8% or 1,300 more permits than a year earlier.

This continues the upward trend from the first half, when permits rose by just over 15%, the strongest increase for a first half in 10 years. Building permits are an indicator of how the fight against housing shortages and rising rents is proceeding.

Good figures, but rising costs

The rising number of permits fuels hopes that order books in residential construction will pick up. The ifo institute for Economic Research recently observed an improved business climate in the sector. However, higher energy prices resulting from the Iran war and higher interest rates are weighing on builders.

From January to August, permits were granted for 169,400 homes in new and existing buildings, the statisticians reported. That was just over 12% or 18,300 more than in the same period a year earlier.

An overall 137,500 apartments in buildings yet to be constructed were approved from January to August, up 12.7%.

The number of permits for single-family homes rose by almost 8%. For duplexes, the number of approved dwellings rose by just over a fifth (21.7%).

In buildings housing multiple families - the most common type of construction - authorities approved 90,600 new-build homes, 14.5% more than in the same period a year earlier.

Government boosts subsidies

Estimates show Germany has a shortage of more than 1 million homes. Last year, the fewest homes were completed since 2012: 206,600, or 18% less than the year before.

The government wants to speed up residential construction with faster approvals through a "turbo" approval system. The building ministry recently increased funding for the construction of energy-efficient homes.