ᐅ There is simultaneously too much construction happening in some areas and too little in others.
Created on: 20 Jun 2017 07:58
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NordlysA very interesting article:
Although a lot of new housing is being built in Germany, it is concentrated in the wrong locations. According to a construction demand analysis by the Cologne Institute for the German Economy (IW), too many new apartments and single-family homes were built in rural districts between 2011 and 2015. This has increased vacancy rates in rural areas while worsening the housing shortage in cities, the IW reported on Monday.
In the seven largest German cities, only 32 percent of the needed apartments were constructed during the same period, according to IW. This means that these cities alone have a shortfall of 60,000 apartments. The shortage of small apartments is particularly severe, the study finds.
The authors also expect the housing shortage in cities to worsen further in 2016, as the number of completed residential buildings last year "only increased moderately." Even if conditions change—such as “interest rates rising slightly again and urban migration slowing down”—housing in cities will remain tight, according to IW. Therefore, more apartments will continue to be needed in cities than are being built.
The situation outside urban centers is quite different, the study says. In many rural districts, significantly too much housing was built between 2011 and 2015. For example, in the district of Emsland in Lower Saxony, more than 1,060 apartments were built “beyond what was required based on demographic trends and vacancies.”
According to IW, similar trends apply in the Steinfurth district in North Rhine-Westphalia and the Vorpommern-Greifswald district. Overall, 20 percent more apartments were built in rural districts than needed. When it comes to single-family homes, the study finds the number built is even “more than double what is necessary.”
The authors attribute this to low interest rates as well as the availability of land. Financing property became cheaper, making purchases more attractive—even though construction costs “have steadily increased.” At the same time, “new builds are favored over existing homes,” which, given the overall declining rural population, leads to new vacancies.
According to IW, this results in village centers increasingly becoming deserted, while municipal infrastructure costs rise due to sprawl. To prevent further vacancies, the institute recommends rethinking municipal policies. Despite competition between communities, mayors should avoid designating new building zones and link new construction to reducing vacancies “to make existing properties more appealing.”
At the same time, communities with shrinking populations should promote inner development and make their centers more attractive. Support from federal and state governments is also needed here, the IW explained.
Overall, the construction of single- and two-family homes is currently declining. The Federal Statistical Office reported on Monday that permits for single-family homes dropped by 16 percent from January to April compared to the same period last year, while permits for two-family homes fell by 6.5 percent. In contrast, permits for multi-family buildings increased by 2.5 percent to a total of 51,100—the highest level for the first four months of a year in 19 years.
My conclusion: If this is true, there will soon be affordable properties for sale in some rural areas. But apartments in cities will remain expensive.
Although a lot of new housing is being built in Germany, it is concentrated in the wrong locations. According to a construction demand analysis by the Cologne Institute for the German Economy (IW), too many new apartments and single-family homes were built in rural districts between 2011 and 2015. This has increased vacancy rates in rural areas while worsening the housing shortage in cities, the IW reported on Monday.
In the seven largest German cities, only 32 percent of the needed apartments were constructed during the same period, according to IW. This means that these cities alone have a shortfall of 60,000 apartments. The shortage of small apartments is particularly severe, the study finds.
The authors also expect the housing shortage in cities to worsen further in 2016, as the number of completed residential buildings last year "only increased moderately." Even if conditions change—such as “interest rates rising slightly again and urban migration slowing down”—housing in cities will remain tight, according to IW. Therefore, more apartments will continue to be needed in cities than are being built.
The situation outside urban centers is quite different, the study says. In many rural districts, significantly too much housing was built between 2011 and 2015. For example, in the district of Emsland in Lower Saxony, more than 1,060 apartments were built “beyond what was required based on demographic trends and vacancies.”
According to IW, similar trends apply in the Steinfurth district in North Rhine-Westphalia and the Vorpommern-Greifswald district. Overall, 20 percent more apartments were built in rural districts than needed. When it comes to single-family homes, the study finds the number built is even “more than double what is necessary.”
The authors attribute this to low interest rates as well as the availability of land. Financing property became cheaper, making purchases more attractive—even though construction costs “have steadily increased.” At the same time, “new builds are favored over existing homes,” which, given the overall declining rural population, leads to new vacancies.
According to IW, this results in village centers increasingly becoming deserted, while municipal infrastructure costs rise due to sprawl. To prevent further vacancies, the institute recommends rethinking municipal policies. Despite competition between communities, mayors should avoid designating new building zones and link new construction to reducing vacancies “to make existing properties more appealing.”
At the same time, communities with shrinking populations should promote inner development and make their centers more attractive. Support from federal and state governments is also needed here, the IW explained.
Overall, the construction of single- and two-family homes is currently declining. The Federal Statistical Office reported on Monday that permits for single-family homes dropped by 16 percent from January to April compared to the same period last year, while permits for two-family homes fell by 6.5 percent. In contrast, permits for multi-family buildings increased by 2.5 percent to a total of 51,100—the highest level for the first four months of a year in 19 years.
My conclusion: If this is true, there will soon be affordable properties for sale in some rural areas. But apartments in cities will remain expensive.
D
dragonfreak20 Jun 2017 08:06The question remains: what does "soon" mean?
In our area, the market is still extremely overheated, even in rural regions. Exorbitant prices are being asked for houses that are over 20 years old. It’s no surprise that many prefer to build new instead.
What is true is the shortage of urban apartments; even the current new construction only helps a little.
In our area, the market is still extremely overheated, even in rural regions. Exorbitant prices are being asked for houses that are over 20 years old. It’s no surprise that many prefer to build new instead.
What is true is the shortage of urban apartments; even the current new construction only helps a little.
M
MIA_SAN_MIA__20 Jun 2017 09:52That makes no sense. Why would a mayor stop allocating new building areas if there is demand for it? In our region, there are sometimes up to 10 applicants per plot.
Perhaps communities with high vacancy rates should ask themselves why this is happening specifically in their area.
Overall, this only leads to further decline in rural areas when people who want to build are not offered available land.
Perhaps communities with high vacancy rates should ask themselves why this is happening specifically in their area.
Overall, this only leads to further decline in rural areas when people who want to build are not offered available land.
MIA_SAN_MIA__ schrieb:
That makes no sense. Why wouldn’t a mayor approve new residential developments if there is demand? In our area, there are sometimes up to 10 applicants for a single plot.
Perhaps municipalities with high vacancy rates should ask themselves why this is the case.
Overall, this only leads to further decline in rural areas when people interested in building have no land available.Unfortunately, those wanting to build are not willing to buy and maintain existing houses. So the demand comes only from buyers.
Sustainability is often ignored in the debate between renovating existing buildings versus new construction.
Many towns are filled with houses left empty because everyone prefers “new builds.”
What we often shake our heads at in holiday regions also happens here in our nearby coastal towns.
We Germans can be selfish—we want a brand-new front door but don’t like to sweep in front of it 😉
Best regards in brief
M
MIA_SAN_MIA__20 Jun 2017 10:29ypg schrieb:
Unfortunately, people who want to build are generally not willing to buy and preserve existing houses. So the demand mainly comes from consumers.
Sustainability is often overlooked in real estate when deciding between renovating an existing building or new construction. Many places are filled with vacant houses because everyone prefers to have something "new."
What we shake our heads at in holiday destinations is also happening here in our nearby coastal towns.
We Germans are selfish in that we want our own new front door but don’t like to sweep in front of it 😉
Best regards in shortWhy bother? At the prices being asked currently, neither renovation nor demolition is attractive. A full renovation alone can easily cost $120,000 and that’s before you even buy the house...
The only solution is for municipalities to effectively address vacancies and put these building plots back on the market. It’s often a loss-making business, but this is happening more and more nowadays.
Nordlys schrieb:
Despite the competition between municipalities, mayors should not designate new building areas and should link new construction to reducing vacancy rates “to make the existing stock more attractive.” The existing housing is often not possible to make more attractive, at least in village centers: plots that have become building land without rearranging agricultural fields. It is hardly feasible to build modern houses on such traditional three-sided farmhouse plots. From a spatial planning perspective, I consider it more beneficial to phase out these settlement forms and develop new housing areas nearby. Baker closed, butcher closed, pub closed, primary school closed. Then a village is dead. It is unrealistic to believe that such places can be revitalized as residential areas through subsidies for converting pigsties. What can be revitalized are older new-build areas—sometimes simply by allowing the gable roofs of the settlement houses to have higher knee walls for more space. In any case, rejuvenating an area requires young families, and attracting them is nearly impossible with a 45-minute bus ride to the nearest daycare center (kindergarten / nursery).
By the way, economic research institutes are hardly in a position to criticize poor planning. Most planning mistakes are actually based on their flawed forecasts.
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