Germany’s apartment-building sector has experienced a strong rebound, with building permits increasing by 60% year-on-year to approximately 24,400 units in September 2025. This surge follows a prolonged decline in the real estate and construction industry, which had been hit hard by rising borrowing costs and economic uncertainty since 2022.
This marked recovery is particularly striking given that September 2024 recorded the lowest number of permits issued since January 2012. The 60% rise in permits suggests that the sector is gradually regaining its momentum after one of its most significant downturns in decades. The increase in approvals indicates that builders and developers are preparing to ramp up construction activity, which could have long-term implications for the supply of housing in Germany.
Despite the positive trend in permits, the recovery remains fragile. Home prices have been rising, and supply remains tight, contributing to continued affordability challenges for many buyers. A recent poll indicated that home prices are expected to rise by around 3% in 2025, marking the first price increase after several years of stagnation. However, there are concerns that the surge in permits may only reflect earlier project approvals rather than an immediate increase in completed units.
For the financial industry and investors, the rebound in permits signals potential opportunities in housing development and construction investment. However, caution is advised due to the persistent economic challenges, including high interest rates and concerns over oversupply. As the market transitions from contraction to recovery, financial firms will need to carefully assess lending risks and exposure to the real estate sector.
