Building permits for apartments in Germany fell 27 per cent in 2023, the statistics office said on Thursday (Feb 29), underscoring a downturn in demand in the construction and real estate industry.

Some 260,100 permits were issued, which is 94,100 fewer permits than in 2022 and the lowest since 2012.

The number of building permits is an important indicator of future construction.

The statistics office said high building costs and difficult financing were behind the decline.

The real estate sector was a bedrock of Germany’s economy for years, accounting for roughly a fifth of output and one in 10 jobs. Fuelled by low interest rates, billions were funnelled into property, which was viewed as stable and safe.

A sharp rise in rates has put an end to the run, tipping developers into insolvency as deals freeze and prices fall. The number of people employed in the building sector has begun to drop for the first time in a decade.

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Germany aims to build 400,000 apartments a year, but has been struggling to meet its goal. reuters