Hamburg’s Housing Market Falters, While Schleswig-Holstein Sees Modest Progress
Hamburg’s Struggling Housing Market
Hamburg’s housing construction has reached a significant low and shows no signs of recovery, according to the Association of Independent Real Estate and Housing Companies (IVD). In 2023, member companies completed only 1,927 apartments, a staggering 40% decline from the previous year and an alarming 66% drop since 2018, when over 5,600 units were finished. These companies account for more than 60% of Hamburg’s new construction.
The bleak outlook continues: in 2023, member companies started construction on a mere 553 units, and for 2024, they plan to initiate work on 1,009 apartments. However, IVD Chairman Kay Brahmst cautioned that these are just plans, and typically, a third of them are postponed or canceled. As a result, Hamburg’s housing market is experiencing a severe stagnation, falling far short of the 10,000 annual building permits targeted by the ruling red-green Senate.
Schleswig-Holstein’s Slight Improvement
Schleswig-Holstein’s housing market, while not thriving, has fared better than Hamburg’s. In 2023, IVD member companies completed 1,634 units, a modest 4% increase over 2022. Construction starts surged by over 150% to around 1,400, and planned starts for 2024 increased by nearly 25% to just under 1,200.
Brahmst attributes this improvement to reduced standards and adjusted funding, making construction more affordable in Schleswig-Holstein.
Hamburg’s Efforts to Boost Housing Construction
Taking inspiration from Schleswig-Holstein, Hamburg has recently established the cost-effective construction initiative, which aims to lower housing construction costs by over a third. This initiative, known as "Hamburger Standard," could potentially save up to €2,000 per square meter of living space. According to Brahmst, this initiative is a step in the right direction.
Challenges and Solutions for Hamburg and Beyond
Brahmst acknowledges that it will take several years for northern Germany to reach its desired housing construction numbers. While housing subsidies can help, they are not a cure-all. Hamburg requires a mix of neighborhoods and diverse housing options to attract various demographics. This includes affordable rental properties, condominiums, and building plots from the city. Additionally, faster building permits and improved financing conditions are crucial.
In Mecklenburg-Vorpommern, IVD member companies completed 58 units in 2023, an 88% decrease from the previous year. However, Brahmst emphasizes that the association has fewer members in the northeast than in Hamburg and Schleswig-Holstein. The significant increase in construction starts to 744 units is largely due to a single project with over 600 apartments.
For the current year, construction starts in Mecklenburg-Vorpommern are planned for 246 units.
