The German housing market is under considerable pressure. Since 2011, the population has grown by around 2.8 million people – mainly in urban areas. High demand is meeting limited supply, leading to rising rents and purchase prices. Low- and middle-income households are particularly affected.
The housing issue has not only social but also economic and political implications. High housing costs reduce labor mobility and promote social tensions. Although short-term measures such as rent controls and reductions in ancillary purchase costs exist, sustainable relief requires a significant expansion of the housing supply.
Construction activity is lagging behind demand. Between 2021 and 2023, only 79 per cent of the required housing was completed nationwide, and in the largest cities, the figure was only 59 per cent. In 2024, the number of completions fell significantly once again. The main causes are high construction costs and complex regulatory requirements.
In particular, the large number of construction-related standards – currently almost 4,000 – increases costs and complicates construction. A reform of the standards landscape, in particular the separation of industrial and application standards, as well as a target-oriented inspection of construction quality, could remedy this situation.
The federal system also contributes to the complexity. Different state building regulations hinder standardisation and prolong planning processes. Nationwide standardisation would simplify construction processes and reduce costs.
One example of regulatory reform is Berlin's Fast-Track Construction Act (SBG) of 2024. It comprises over 100 changes to speed up planning and approval procedures. If the law proves successful, it could serve as a model for other federal states.
Read the full analysis and arguments: ‘Bürokratie pragmatisch reduzieren – Baukosten senken’ here as PDF. Please note, to date the publication is only available in German.
