BERLIN, June 19 -- The number of residential building permits fell by 17.0 percent year-on-year in April, indicating Germany's housing crisis continues to worsen, the Federal Statistical Office (Destatis) said on Tuesday.

Continuing its downward trend in recent years, only 17,600 units were granted building permits in April, according to Destatis. This marks a sharp decline of 43.5 percent compared to the same month in 2022.

"It's a real crash, there's no end in sight to this downward spiral," Felix Pakleppa, chief executive of the German Construction Federation (ZDB), said in a statement. "Germany's housing shortage continues to escalate," he warned.

Last year, the German government missed its target of 400,000 new homes once again. Only just under 295,000 apartments were completed, representing a slight decline of 0.3 percent compared to 2022, according to official figures.

Despite initial increases at the start of the year, new business in Germany's real estate sector is "still far from the level seen during the zero-interest rate phase," the Association of German Pfandbrief Banks (vdp) said in March.

After years of rising interest rates and soaring building cost, the German construction industry remains hopeful following the European Central Bank's (ECB) decision earlier this month to cut the bloc's key rate to 4.25 percent.

Although further cuts were not announced, inflation in the euro zone has slowed to below 3 percent. "We still need to keep our foot on the brake for a while, even if we are not pressing down as hard as before," ECB president Christine Lagarde said on X.

"We welcome the long-awaited reduction in the key interest rate as the beginning of a turnaround in the crisis," said Andreas Mattner, president of the German Property Federation (ZIA). "Interest rates that have risen too quickly have been a real nuisance for the real estate sector so far."

The federation estimates that there is already a shortage of 600,000 units in Germany and expects this figure to rise to 830,000 by 2027. In addition to falling interest rates, ZIA hopes that a possible reduction in real estate transfer tax will provide a "further motivational boost for investors."

  - Xinhua