The number of building permits in Germany has seen a marked decline according to figures released by the country's Federal Statistical Office (Destatis).

During the first half of 2023, German housing authorities approved the construction of 135,200 apartments, which was 50,600 fewer building permits issued during the same period in 2022. 

Why are fewer houses being built in Germany?

The numbers for June alone showed a drop of 28.5% with only 21,800 approved dwellings when compared with the same month last year.

"Rising construction costs and increasingly poor financing conditions are still likely to have contributed to the decline in building projects," the agency said in a statement.

The government agency pointed out that this is related to building permits for dwellings in new buildings and also new dwellings in existing buildings.

Destatis noted a decline in building permits for all building types.

Between January to June, 111,500 dwellings were approved in new residential buildings, nearly 31% fewer than in the same period last year.

The number of building permits for single-family houses fell by 35.4%, while for two-family houses, the number of approved dwellings had fallen by 53.4%.

The decline in numbers comes amid calls from firms and some politicians for Berlin to step in and support the industry ahead of a meeting next month with Chancellor Olaf Scholz.

What is behind the German property sector slump?

There have been worrying warning signs coming from Germany's property sector, with a number of property developers registering for insolvency in recent weeks.

"The balance sheet for the first half of 2023 shows an incredibly bleak picture in residential construction," said Tim-Oliver Mueller, head of the German Construction Industry Federation.

German Housing Minister Klara Geywitz recently said that the coalition government will fall short of its target of building at least 400,000 new apartments per year.

Rising real estate prices and increased interest rates on loans make buying a house or apartment unaffordable for many Germans. In many instances, the only options available are older houses that have dated fossil fuel heating systems.

Vulnerability in the real estate sector has also emerged in the US and China.

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kb/ab (dpa, Reuters)