Germany faces housing crisis as homeownership hits 20-year low

Germany is facing a significant housing crisis characterized by record-low homeownership rates and a shortage of affordable rental properties. A study by the Pestel Institute reveals that the homeownership rate in Germany has fallen to 43.5 percent, the lowest level in 20 years, leaving the country at the bottom of EU rankings. Key drivers include rising interest rates, high construction costs—which have increased by 160 percent since 2000—and a lack of effective federal ownership subsidies following the abolition of 'Baukindergeld' in 2021.

In Berlin, the crisis is particularly acute due to a combination of low supply and high prices. This has fueled political movements calling for the expropriation of large real estate companies, such as Vonovia and Deutsche Wohnen, to remove over 200,000 apartments from profit-driven management. While proponents argue that socializing these holdings could stabilize prices, the federal government has attempted to introduce legislation to prohibit the nationalization of private rental stocks, a move critics suggest may face challenges in the Federal Constitutional Court.