©Reuters. FILE PHOTO: The landmark Fernsehturm television tower is seen near residential apartments in Berlin, August 20, 2013. REUTERS/Thomas Peter/File Photo
FRANKFURT (Reuters) -Building permits for apartments in Germany fell 31.5% in July from a year earlier, the statistics agency said on Monday, pointing to a slump in demand that has hit the construction and real estate sectors.
The plunge in permits comes amid calls from Berlin companies for stimulus measures to support the sector ahead of a meeting next week with Chancellor Olaf Scholz.
The statistics office attributed the drop in demand to high construction costs and difficulties in obtaining financing, factors that have increased tension in the broader sector.
Authorities granted permits for the construction of 21,000 apartments in July, 9,600 fewer than a year earlier. The number of permits fell by 28% in the first seven months of the year.
Germany aims to build 400,000 apartments per year, but is struggling to reach this goal.
For years, low interest rates fueled a global boom, fueling interest in German real estate, which was considered as safe and stable as the country. A sharp rise in interest rates ended the run, leaving a string of developers insolvent as deals stalled and prices fell.
Tim-Oliver Mueller, head of the German Construction Industry Federation, is calling for an emergency package of measures from the government, including a property tax cut and expansion of a low-interest credit program to support new housing construction.
“The free fall of housing permits continues unabated. If the federal government does not decisively turn the tide during next week’s housing freeze, the housing shortage in Germany will only worsen,” he said in a statement.
Declines for single-family and two-family homes were even sharper during the first seven months of the year, down 37% and 53% from a year earlier.