Surge in Construction Activity in Eastern Germany
Key Points:
- Rising construction loans in Eastern Germany, with a 7.1% increase in 2023.
- Housing loans account for a significant portion (5.1 billion euros) of the total loans, showing a 9% growth from 2022.
- Private individuals drive the majority of new loan applications, with a 12.5% increase to 4.43 billion euros.
- 3.6 billion euros of private loans are allocated to housing, with 75% dedicated to purchasing or acquiring existing properties.
- Business and self-employment loans remain stable, with a 1% decline compared to a 28% decrease in 2022.
- Industry leaders advocate for reducing bureaucracy and stabilizing economic policies.
More Details:
The Ostdeutscher Sparkassenverband (OSV), an association of savings banks in Eastern Germany, reports a significant increase in construction activity in the region. In 2023, Sparkassen (savings banks) in Brandenburg, Mecklenburg-Western Pomerania, Saxony, and Saxony-Anhalt granted 10.7 billion euros in loans to private customers and businesses, representing a 7.1% growth compared to the previous year.
Of the total loans, 5.1 billion euros were allocated to housing construction, marking a 9% increase from 2022, when the sector experienced a sharp decline. The resurgence in housing construction is attributed to factors such as rising demand for housing, lower interest rates, and government incentives.
The OSV highlights that private individuals are the primary drivers of new loan applications, with a remarkable 12.5% increase to 4.43 billion euros. Out of this, 3.6 billion euros were specifically designated for housing, indicating a strong desire among private individuals to own or acquire their own homes. Notably, 75% of these housing loans were used to purchase existing properties.
While business and self-employment loans experienced a slight decline of 1%, the OSV views this as a sign of stabilization, considering the significant decrease of 28% observed in 2022. This stability suggests that businesses are cautiously optimistic about the economic outlook and are seeking financing to support their operations and growth plans.
Industry Perspective:
Ludger Weskamp, the Managing President of the OSV, emphasizes the importance of addressing bureaucracy and economic policy volatility in the upcoming federal election. He stresses that the current level of bureaucracy is a hindrance to businesses and individuals alike, and calls for decisive action to streamline administrative processes.
Weskamp also advocates for consistency in economic policy-making, expressing concern that the frequent changes in regulations and conditions create uncertainty and hinder long-term planning. He believes that a stable and predictable economic environment is essential for fostering growth and prosperity in Eastern Germany.
Conclusion:
The resurgence of construction activity in Eastern Germany, driven by strong demand for housing and favorable financing conditions, is a positive sign for the region’s economy. The OSV’s efforts to reduce bureaucracy and advocate for stable economic policies will be crucial in sustaining this growth momentum and creating a more conducive environment for businesses and individuals to thrive.
