Germany building booms on low costs

The number of residential building approvals in Germany rose 8.4% to 309,000 in 2015, the highest in 15 years, the Federal Statistics Office said, as Europe’s largest economy experiences a construction boom.

Record low borrowing costs is encouraging many Germans to overcome their traditional aversion to buying their own flats and houses, with some also regarding property as an attractive investment.

Rising state spending on refugees and special tax incentives for investors who build flats in urban areas are expected to give the construction sector an additional push.

“Today’s figures show the positive trend will continue,” said construction minister Barbara Hendricks. “Construction activity is going in the right direction. But this is still far too little.”

Especially lower-income families, but also increasingly households with average incomes, have difficulty finding affordable housing, she said.

More than 1m migrants arrived in Germany last year, most seeking refuge from war and poverty.

Even before the refugee numbers started to increase last summer, there was an estimated lack of 800,000 affordable flats in urban areas. With demand outstripping supply, property prices and rents have soared in cities such as Berlin, Hamburg, and Munich.

The Bundestag lower house of parliament yesterday debated the government’s draft law to let investors reduce their tax bills. The construction sector is one of the main growth drivers in Germany.

* Reuters