NRW.BANK publishes Housing Market Report 2022 - Construction backlog at record level – decline in orders

In spite of the difficult environment, almost 50,000 flats were completed in both 2020 and 2021 – a level last seen 15 years ago. However, due to the war in Ukraine and its impact on supply chains, inflation and the volume of orders, construction activity is expected to decline in the medium term. These are the findings of the Housing Market Report NRW 2022 recently published by NRW.BANK.

The number of building permits remained high: 60,900 permits for new flats were granted in 2021. IT.NRW, the State Statistical Office of North Rhine-Westphalia, also recorded a high number of applications for the first half of 2022. With 130,000 approved but not yet completed flats, the construction backlog moreover reached a record level at the end of 2021.

“New, affordable housing is an essential aspect for the quality of life in cities and municipalities and for shaping their future. The current environment in the housing construction sector impedes this development,” says Claudia Hillenherms, member of NRW.BANK’s Managing Board. “To ensure that more affordable and modern homes are built in North Rhine-Westphalia, we provide support in the form of financing and a comprehensive range of advisory services.”

Favourable rents through public funding

Despite the high level of construction activity, rents continued to rise in the COVID-19 years 2020 and 2021. This trend continued in the first half of 2022. While rents are largely stable in parts of the Sauerland and the Ruhr area as well as in parts of East Westphalia-Lippe and in the Märkische Kreis, there is a high level of rents in the cities along the Rhine and the surrounding area as well as in Münster, Aachen and the south of Essen. Overall, rents rose more strongly than purchasing power and incidental rental costs also increased as a result of rising energy prices. The federal and state governments support low-income households with significantly higher housing allowances. Gratifyingly, subsidised housing construction developed differently with stable rents that are significantly below the market level. It thus plays a key role in the supply of affordable housing.

Until the beginning of 2022, the interest rate level on the capital market also provided an incentive for new construction. Since then, however, interest rates have risen significantly, which makes both newly concluded and follow-up financing more expensive. In this environment, public housing promotion continues to gain in attractiveness due to the growing interest rate advantage.

Rising demand for owner-occupied flats also outside the big cities

The COVID-19 pandemic fuelled demand for home ownership in the past two years. The search for greater freedom and more living space for working from home also played a role in this context. This was reflected in prices, with a particularly strong increase recorded for owner-occupied flats, especially in the cities along the Rhine, Aachen, Münster, Bielefeld, Paderborn and parts of the surrounding area. This trend was partly also observed in medium-sized towns in more rural areas, for example in the Heinsberg and Kleve districts as well as in the Münsterland and Siegerland. In these regions, demographic change is also having an impact, contributing to a diversification of the housing supply.

Contact
Caroline Gesatzki
Press Officer
+49 211 91741-1847
caroline.gesatzki@nrwbank.de


Contact for inquiries:
Birgit Kranzusch, Deputy Press Officer, Phone: +49 (0)211 91741-1997

About NRW.BANK

NRW.BANK is the promotional bank of North Rhine-Westphalia (NRW). Its mission is to support its owner – the state of North Rhine-Westphalia – in the completion of its structural and economic policy tasks. In its three promotional fields “Economy”, “Housing” and “Infrastructure/Municipalities”, NRW.BANK uses a wide range of promotion tools – from low-interest promotion loans to equity financing to advisory services. It cooperates with all banks and savings banks based in NRW on a competition-neutral basis. NRW.BANK takes into account the existing offers by the Federal Government, the North Rhine-Westphalian government and the European Union in the arrangement of its promotion.

For more information, visit www.nrwbank.de/wmb - Follow us on www.twitter.com/NRWBANK