Germany’s shortage of affordable housing is becoming an increasingly serious economic issue, according to a report by the Scientific Advisory Board to the Federal Ministry for Economic Affairs. What is often viewed primarily as a social problem is also emerging as a risk to the country’s economic performance and growth.
High rents can make it harder for workers to move to more productive jobs and can prevent companies from recruiting needed specialists. The report says housing costs place a burden on households and reduce the financial benefit of relocating for employment.
The problem is particularly pronounced in economically strong regions, where wages are often higher but rents are also more expensive. People considering a move to Munich, Frankfurt or another growth centre may have to spend much of their additional income on housing, making a job change financially unattractive.
Felix Bierbrauer, chairman of the advisory board, said that people moving for work often have little more money left after paying their rent. As a result, migration within Germany is becoming less closely linked to regional wage differences. When workers cannot accept attractive positions because they cannot find affordable accommodation, potential productivity and economic opportunities remain unused.
The economists are calling for stronger incentives for municipalities to designate additional land for construction. They argue that local authorities frequently bear the follow-up costs of new developments, including schools, childcare facilities, sports centres and transport links, while private landowners often benefit from increases in property values.
To address this imbalance, the report suggests making landowners and developers contribute more to infrastructure costs. Possible approaches include an expanded infrastructure-cost levy or a planning-value compensation scheme, allowing municipalities to recover a larger share of the expense generated by new housing areas.
The advisory board also proposes making better use of existing urban land. Older development plans could permit more floor space as a general rule, while adding floors to buildings and making moderate extensions within established settlements could become easier. This would help create additional housing without requiring every project to overcome separate local objections.
Housing costs are also a major concern for younger people. The initiative “Gen Z regelt” recently called for peaceful demonstrations in around 30 cities. Alongside demands related to schools, addiction services and psychotherapy, the group highlighted rising living costs and the shortage of housing.
For young people, apprentices and those entering the workforce, the difficulty of finding affordable accommodation can delay financial independence and influence decisions about where to live, work and build a future.
In the financial markets, Germany’s DAX was trading just below 26,000 points. The leading index had exceeded 26,100 points in the previous week, reaching its highest level since early September.
Oil prices came under pressure following a report about diplomatic efforts by US President Donald Trump concerning the war between the United States and Iran. The prospect of progress in negotiations eased concerns about geopolitical risks and possible disruptions to oil supplies. However, traders were also watching the US midterm elections and Apple’s quarterly results, which were due after the US market close and could offer indications about the technology sector and consumer sentiment.
Sources: Tagesschau.