The number of building permits issued for new apartments rose sharply again in August. 20,600 new apartments were approved - 6.8 percent more than in the same month last year, as the Federal Statistical Office announced.
The general upward trend in building permits leveled off somewhat in July, but then picked up again. In the first eight months the increase was 12.1 percent compared to the same period last year.
This means that the upward trend from the first half of the year continues, when building permits increased by a good 15 percent - the strongest increase for a first half of the year since 2016. Building permits are an indicator of the fight against a housing shortage and rising rents.
Multi-family homes are particularly in demand
According to the information, the supervisory authorities approved 90,600 new apartments in multi-family buildings up to and including August - 14.5 percent more than in the previous year. In addition, 31,500 new single-family homes (plus 7.8 percent) and 10,000 apartments in two-family houses (plus 21.7 percent) were approved.
Slow recovery from a historic low
However, the current growth must be viewed in the historical context. Felix Pakleppa, general manager of the Central Association of the German Construction Industry, points out: "From January to August, 169,400 apartments were approved. That sounds like a lot, but it is still around a third less than in 2021, when over 250,000 apartments were approved in the same period. We are recovering from a historic low, we are still a long way from a normal level."
A building permit does not mean that an apartment has been built, explains Pakleppa: "At the end of 2025, around 450,000 approved apartments were on hold because construction was not worthwhile for many."
Higher financing costs burden
Despite increasing approvals, the mood in German housing construction deteriorated in September due to rising interest rates. The barometer for the business climate fell to minus 25.1 points from minus 22.5 points in August, as the Munich ifo Institute announced in its survey.
In particular, companies were more skeptical about the business prospects for the coming months; they assessed their current situation largely the same. "The ECB's interest rate increase is likely to have dampened confidence in housing construction," said Ifo survey director Klaus Wohlrabe. “The prospect of higher financing costs again is weighing on the industry.”
Federal government increases funding
It is estimated that there is a shortage of more than a million apartments in Germany. Last year, fewer apartments were completed in this country than since 2012: 206,600 or 18 percent fewer than the previous year. The federal government wants to advance housing construction with a “construction turbo” through faster approvals. Most recently, the Federal Ministry of Construction increased funding for the construction of new energy-efficient houses with the EH 55 standard.
But that's not enough for the industry: "Wanting to cut the new construction budget by over 40 percent now, as the federal government is planning for 2027, is the worst possible signal. Those willing to build and investors need planning security, not the next U-turn. Only then will the upward trend on paper also become an upswing on the market," says Pakleppa.
