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New buildings in Lower Saxony:
The rise in interest rates is slowing down the real estate industry
Photo: Julian Stratenschulte / dpa
In view of rising interest rates and increasing regulation of the financial sector, the German real estate sector sees itself in a pincer.
"The construction sector has come to a virtual standstill in recent months - as has construction financing," said the Vice President of the Central Real Estate Committee (ZIA),
Jochen Schenk
, on Tuesday in Berlin.
Schenk pointed out that new applications for construction financing at the end of 2022 had fallen by 43 percent compared to the same period last year: "This is a negative record that has never existed in this form before."
He named the steep rise in interest rates as the main problem, even if this is not the sole reason for the decline.
According to Schenk, banks are forced to act more cautiously.
This is not only due to general risk provisioning, but also because of increasing regulation - be it through the criteria of the residential real estate loan directive, the activation of the countercyclical capital buffer or the introduction of the sectoral systemic risk buffer.
"These measures should all be reconsidered due to the new circumstances. Otherwise they will not minimize the risks, but rather accelerate certain processes," warned Schenk.
Bundesbank Vice President
Claudia Buch
has meanwhile rejected demands from the industry to relax certain capital requirements for banks, such as the countercyclical capital buffer, in order to enable additional lending.
New business and sales in the German construction industry collapsed in 2022 as a result of rising interest rates and higher costs.
The ongoing crisis, especially in residential construction, could lead to redundancies in construction for the first time in over a decade, as CEO
Felix Pakleppa
from the ZDB association recently warned.
cr/Reuters