Housing industry in crisis
Discussions about and demands for affordable housing have been at the heart of public discourse for many years. Housing is a human right that must be guaranteed for all segments of society. Fulfilling this goal is also the task stipulated in the articles of association of every housing company that serves municipalities, including wbg Villingen-Schwenningen.
The current situation and the related developments have exacerbated this already precarious situation. In this article, we would like to explain the background of the status quo in housing construction, which involves far-reaching political factors.
Direct impact on ongoing new construction projects
We began a major construction project on the Sturmbühl site in Villingen-Schwenningen back in 2020, for which we launched an architectural competition, among other things. As a municipal housing company, we calculated the majority of the living space – subsidized with federal and state funds – at a target rent of €7 to €10 per square meter. Unfortunately, the turmoil and events of the last three years have rendered this calculation unrealistic. If the project were to be implemented as originally planned, we would have to charge a rent of €18 to €20 per square meter. Such a rent is no longer compatible with the principles of social housing and led to an immediate project halt, which continues to this day.
Direct impact on renovations
This trend is also clearly evident in the decarbonization and renovation of existing properties. Previously, with the help of public funding, we were able to carry out renovations that met the KfW55 standard and resulted in a rent increase of only 13,7%. Under current conditions, we would be forced to increase the rent by 37,3%. Such a rent increase is neither legally nor morally justifiable.
Four key factors
Four specific factors are decisive for these market changes.
interest
Interest rates have now quadrupled, which, together with high inflation, makes financing construction projects a major financial undertaking.
building-costs
Over the past four years, construction costs have increased by 50%. This means that, in addition to the economic crisis, quadrupled interest rates, and high inflation, building has generally become even more expensive.
Requirements
Another problem that is noticeably and rapidly driving up costs is the increased legal requirements that new buildings must meet. These include, among other things, strict and high energy standards, as well as very stringent noise protection regulations. To comply with these requirements, structural measures are necessary, which also increase costs. In addition, there are new and expensive certification procedures that document compliance with the standards and are a prerequisite for obtaining subsidies.
Decline in subsidies
The vicious cycle is completed by the drastic decline in funding. Currently, the federal and state governments do not have sufficient resources to adequately counteract these developments. Approximately 50 billion euros would be needed, although only 1 billion euros in support can be expected in the foreseeable future.
We cannot achieve anything with our own resources given these market developments. Under the current conditions, an equity investment of at least 50% would be necessary, which we, as a company oriented towards the common good, simply cannot manage.
And yet, even though the situation may seem bleak at the moment and we unfortunately cannot present any publicly visible progress on our projects, we are working intensively on ways to at least mitigate the dramatic economic developments. wbg Villingen-Schwenningen sees itself as an innovator in the housing sector. That is our commitment to ourselves. With innovation and dedication, we will respond to the current crisis and do everything in our power to fulfill our mission of providing good and fair housing to the broad population of Villingen-Schwenningen.