- 25 Sep 2023 23:05
#15288428
Many of you in this forum have said that the solution to overcrowding and unaffordable housing in big city areas is to build up.
Well, here is an article about what's happening in Germany. Many developers who were building high-rise condominiums have gone out of business. Several large buildings are sitting vacant and unfinished.
Unfortunately many people who paid for a condo in a building that was still under construction at the time will not be able to get their money back.
The article interviews one man, Valeriy Shevchenko, 33 years old, who had made a 250,000 euro advance payment for a 2-bedroom apartment that would end up costing a total of 500,000 euros. The building was in one of Berlin's most popular districts. He says that he spent all his savings to make that payment.
Their only hope now is to find someone else to take over the construction, or to finish it themselves.
Many of the halted projects were well advanced, pushing buyers into dire financial straits.
A couple of factors are driving these bankruptcies. Higher interest rates, inflation, a slump in Germany's economy.
"Investors no longer know how to make certain projects profitable.
In a sign of the crisis, developer giant Vonovia recently decided to put 60,000 projects on hold.
One in five property companies has reported cancelling building projects in August, while 11.9 percent face financing difficulties, according to a recent survey by economic research institute Ifo, which described the figures as unprecedented in 30 years."
"[German chancellor] Scholz's government had promised to build 400,000 homes a year to alleviate an endemic housing shortage made worse by burgeoning demand from an inflow of refugees and foreign workers.
But building permits have nose-dived 25 percent between January and June compared to a year ago.
Experts believe the sector will struggle to even hit 250,000 in new build approvals this year, while next year bodes no better with a forecast of under 200,000.
With fewer new housing stock coming on the market, rents are rising unabated, further eroding households' purchasing power."
Germany's housing sector slumps into crisis , AFP (Agence France-Presse), September 25, 2023
Well, here is an article about what's happening in Germany. Many developers who were building high-rise condominiums have gone out of business. Several large buildings are sitting vacant and unfinished.
Unfortunately many people who paid for a condo in a building that was still under construction at the time will not be able to get their money back.
The article interviews one man, Valeriy Shevchenko, 33 years old, who had made a 250,000 euro advance payment for a 2-bedroom apartment that would end up costing a total of 500,000 euros. The building was in one of Berlin's most popular districts. He says that he spent all his savings to make that payment.
Their only hope now is to find someone else to take over the construction, or to finish it themselves.
Many of the halted projects were well advanced, pushing buyers into dire financial straits.
A couple of factors are driving these bankruptcies. Higher interest rates, inflation, a slump in Germany's economy.
"Investors no longer know how to make certain projects profitable.
In a sign of the crisis, developer giant Vonovia recently decided to put 60,000 projects on hold.
One in five property companies has reported cancelling building projects in August, while 11.9 percent face financing difficulties, according to a recent survey by economic research institute Ifo, which described the figures as unprecedented in 30 years."
"[German chancellor] Scholz's government had promised to build 400,000 homes a year to alleviate an endemic housing shortage made worse by burgeoning demand from an inflow of refugees and foreign workers.
But building permits have nose-dived 25 percent between January and June compared to a year ago.
Experts believe the sector will struggle to even hit 250,000 in new build approvals this year, while next year bodes no better with a forecast of under 200,000.
With fewer new housing stock coming on the market, rents are rising unabated, further eroding households' purchasing power."
Germany's housing sector slumps into crisis , AFP (Agence France-Presse), September 25, 2023
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