Germany housing crisis causes billions in economic losses

The Bau-Monitor 2026 report by the Pestel-Institut highlights a significant decline in residential construction across Germany, resulting in substantial economic losses. Nationally, approximately 84,600 fewer homes were completed in 2025 compared to 2023, leading to an estimated net loss in construction revenue of roughly 26.8 billion to 26.9 billion euros.

This downturn has impacted the broader economy, reducing the contribution to the Gross Domestic Product (GDP) by approximately 0.6 percentage points. The state has also seen significant losses in tax revenue, including billions in turnover and property transfer taxes.

Regional impacts are severe. In North Rhine-Westphalia, the shortage is estimated between 235,000 and 364,000 units, with a revenue loss of about 3.25 billion euros. Baden-Württemberg faces a deficit of approximately 201,000 homes and a revenue loss of 4.5 billion euros. Despite these figures, some regions have noted a recent upward trend in building permits.