German Construction Industry Faces Crisis as Free Money Ends
The German construction industry is facing a crisis as negative interest rates have turned positive, causing borrowing costs to rise and leading to a surge in construction cost inflation. The government's target of creating 400,000 new apartments per year to address the housing affordability crisis is falling short, with only about 300,000 units being built annually. Higher mortgage rates and falling property prices have also contributed to the decline in home prices. Major property developers have filed for insolvency and bankruptcy, and building permits have plunged by 35%. The multifamily construction sector, crucial for addressing surging rents, is particularly affected by the difficult conditions.