Market report: Expensive living space is slowing down Germany's economy

Market report New report Housing shortage is slowing down Germany's economy As of: November 2nd, 2026 • 2:15 p.m

The lack of living space and high rents prevent professional mobility and make it difficult for companies to find skilled workers. Experts are therefore calling for more incentives for housing construction.

The lack of affordable housing is increasingly becoming a serious problem for the German economy. According to economic experts, what is primarily a social burden for many people is increasingly becoming a location and growth risk.

High rents make career advancement more difficult, slow down the mobility of workers and can prevent companies from attracting urgently needed skilled workers. This emerges from a report by the Scientific Advisory Board at the Federal Ministry of Economics.

The economists who advise the department of Economics Minister Katherina Reiche (CDU) warn of the economic consequences of the housing shortage. “High housing costs put a strain on households and make it difficult to switch to a more productive workplace,” the report says. The lack of housing is no longer just a social issue, but rather an obstacle to Germany's economic development.

The dream of owning a home is a distant dream for the masses. Prices are rising, as are building interest rates. more

The problem is particularly evident in economically strong regions. Wages are often higher there, but so are rents. If you want to move to Munich, Frankfurt or another growth region for a better-paying job, for example, you will have to spend a significant part of your additional income on the apartment. In the worst case scenario, changing jobs is hardly worth it financially.

“If you move for a job, you hardly have any money left in your pocket,” said Felix Bierbrauer, Chairman of the Scientific Advisory Board, with a view to the rising rents for new contracts. Migration movements within Germany are therefore increasingly less oriented towards regional wage advantages.

This has consequences for the entire labor market: If employees cannot accept attractive jobs because they cannot find affordable housing locally, productivity and economic opportunities remain unused.

The “construction turbo” has been in effect for a year. What has the law done to speed up construction projects? more

The Scientific Advisory Board therefore proposes several measures to stimulate housing construction. The focus is on the municipalities. They should receive stronger incentives to designate additional building land.

So far there have often been false incentives: cities and municipalities have to bear the follow-up costs of new development areas - for example for schools, daycare centers, sports facilities and additional transport connections. The increases in the value of the properties, on the other hand, often benefit private owners.

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To correct this imbalance, the economists suggest that property owners and developers should contribute more to the infrastructure costs. A so-called expanded infrastructure cost allocation or a planning value equalization would be conceivable. This would allow municipalities to absorb a larger share of the costs that arise from new development areas.

In addition, it should become easier to make better use of existing areas. Older development plans could allow for more floor space across the board. According to the advisory board, it should also be easier to add additional floors and moderate expansions within existing settlements. Additional living space would then no longer have to be pushed through in every individual case against local resistance.

Find an apartment at the start of the semester? Housing is highly competitive in the university and Hanseatic city of Greifswald. ndr

The recent protests by the “Gen Z Regulates” initiative also show how much the issue of housing concerns the younger generation. The organization had called for peaceful demonstrations in around 30 cities. The abbreviation Gen Z stands for the generation of approximately 15 to 30 year olds.

In addition to more money for schools, addiction support and psychotherapy, rising living costs and the housing shortage are among the central concerns of the initiative.

This means that the housing issue is also becoming more of a socio-political focus. Young people, trainees and young professionals in particular have difficulty finding affordable housing in many cities. High rents can not only delay financial independence, but can also influence decisions about where people can live, work and build their future.

Not only France - there were protests again in many other countries too. more

On the financial markets, the DAX is currently just below the 26,000 point mark. In the previous week, the leading German index reached more than 26,100 points, its highest level since the beginning of September.

Oil prices came under pressure on the raw material markets. The trigger was a report on US President Donald Trump's diplomatic efforts in the war between the US and Iran.

Hopes for possible progress in diplomatic talks eased tensions on the oil market. Investors were reacting to the prospect that geopolitical risks and possible disruptions to oil supplies could reduce.

Concerns about a renewed escalation in the Iran war are growing - especially in the Gulf states. One consequence: rearmament. more

However, the uncertainties have not been completely eliminated. Traders pointed to the upcoming midterm elections in the US on Tuesday.

Investors are also turning their attention to Apple: The technology group wants to present its quarterly figures in the evening after the US stock market closes. The results could provide important clues about business performance in the technology sector and consumer sentiment.

This topic in the program: tagesschau.de | Intermediate status at midday - Expensive housing puts a strain on the economy | 11/2/26 | 12:21 p.m