Economists and the Pestel Institute warn that Germany's housing shortage, which has grown significantly over the past three years and now includes an estimated 1.2 million homes missing in Western Germany, will continue to worsen without a fundamental policy shift.

They emphasize the need for broad government support across all housing sectors—social housing, private rentals, and homeownership—and recommend against raising construction standards that could slow down building progress.

The experts advocate for easing standards in housing subsidies and promoting state financial support for all types of housing projects to effectively address the crisis.

The housing shortage has serious economic implications, including difficulties for companies in recruiting employees and deterring workers from changing jobs due to housing concerns, which could hamper overall economic growth.

Construction of new homes in Germany has stagnated for three years, and without a policy shift, the shortage is expected to worsen further.

The German government, led by Federal Building Minister Verena Hubertz, plans to tackle the crisis with stricter rental regulations, increased penalties, faster building permits, and a record budget of 7.4 billion euros for 2025, alongside additional infrastructure and climate funds.

These findings were presented at the Expo Real real estate fair in Munich, which is focusing on housing policy issues and underscores the urgency of addressing the crisis.

The investigation into the housing shortage was commissioned by Messe München, the organizer of the Expo Real fair, highlighting the event's relevance to the ongoing housing debate.

The study also accounts for long-term vacant apartments, which are typically excluded from statistical counts, to provide a more accurate picture of the housing deficit.

Economists recommend not tying housing subsidies to increasingly higher standards, as this could hinder construction efforts and worsen the crisis.