Loans for new construction in Germany plummet to 12-yr low

New real estate loans to private households and self-employed people in Germany plunged to their lowest level since 2011, according to research by analysts Barkow Consulting published on Monday.

The volume of new loans for construction by German banks fell 43 percent year-on-year to 13.5 billion euros (14.6 billion U.S. dollars) in December 2022, according to Barkow Consulting.

The monthly record volume of 32.3 billion euros was recorded in March last year, according to the research figures based on data by the European Central Bank (ECB) and Deutsche Bundesbank.

The COVID-19 pandemic and the Russia-Ukraine conflict had a "significant impact" on construction in Germany, the Federal Statistical Office (Destatis) said last week. Due to delivery bottlenecks, material shortages and higher energy prices, the cost of nearly all building materials rose "considerably."

In order to relieve the housing market, which was already overcrowded when the German government took office in 2021, the number of new buildings was to be increased to 400,000 annually, including 100,000 social units.

Between January and November 2022, however, the number of new homes approved for construction fell by almost 6 percent to around 275,000. The number of building permits for single-family homes and duplexes fell even more sharply, by more than 10 percent.

German Minister for Housing Klara Geywitz believes the government's goals will not be achieved until 2024. "We have a structural problem, where more billions for housing alone won't help," she said last month. (1 euro = 1.08 U.S. dollars)