Germany faces shortage of 1.35 million homes

Germany is facing a significant housing deficit of approximately 1.35 million units, according to the ‘Bau-Monitor 2026’ report produced by the Pestel Institute for the German Association of Building Material Specialists (BDB).

The shortage is most acute in North Rhine-Westphalia with 360,000 missing units, followed by Bavaria with 220,000, and Berlin with nearly 60,000. Matthias Günther, managing director of the Pestel Institute, described the situation as ‘market failure,’ noting that while demand is at a high, construction rates have reached historic lows.

Experts warn that the housing crisis could act as a brake on economic growth and the integration of skilled workers, as the country lacks sufficient accommodation for immigrants needed to address labor shortages. To mitigate this, the BDB is calling for faster implementation of legislation regarding ‘Building Type E’ to reduce construction costs and increase affordability by moving away from standards that exceed legal requirements.