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Germany recorded a nearly 14% year-on-year increase in permits for apartment construction in June, adding to signs that the country's property sector is gradually recovering from its prolonged downturn. Authorities approved permits for around 21,600 apartments during the month, about 2,600 more than a year earlier. The rise in permits is important for the construction industry as approvals provide an indication of future building activity. However, the recovery remains at an early stage, with housing officials noting that permit levels are still well below what Germany needs.
Germany's residential construction sector is showing further signs of improvement, with apartment building permits rising nearly 14% year-on-year in June, according to data from the country's statistics office.
Authorities approved permits for around 21,600 apartments during the month, an increase of about 2,600 units from a year earlier. Building permits have also been increasing in recent months, making the latest figures an important indicator for future construction activity.
Germany's property sector entered a severe downturn in 2022 following the outbreak of the war in Ukraine. Higher borrowing costs, increased construction expenses and inflation weighed on housing development and investment. The latest increase in permits suggests that conditions are beginning to improve, although activity remains below the levels required to address the country's housing needs.
Housing Minister Verena Hubertz said the improvement was coming from a low base and that Germany remained far from the level of construction required. The government has been looking at measures to accelerate residential development, including simplifying building procedures and making construction approvals faster.
The European Commission has also noted that Germany is working on measures to accelerate housing construction, including further digitalisation and simplification of building permits. The country continues to face housing affordability and supply pressures, particularly in areas with strong demand.
Despite the recent improvement in permits, the outlook for the real estate industry remains affected by financing conditions. Higher interest rates and renewed inflation concerns following unrest in the Middle East have put some pressure on expectations for the sector.
The increase in permits therefore points to a gradual recovery rather than a full return to strong construction activity. Developers continue to face high financing and construction costs, while the availability of new housing remains an important concern for Germany.
Source Reuters
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