section_path: Crisis/Cost of living and housing
section_name: Cost of living and housing
paragraph_text: Cost of living and housing
  
  Germany faced a severe housing crisis in 2024, affecting a broad spectrum of its population. Surveys reported that there was a shortage of more than 800,000 apartments across Germany, resulting in over 9.5 million people, predominantly families with single parents, living in cramped conditions. This crisis was not limited to lower-income groups but increasingly impacted the middle class, leading Scholz to describe housing as Germany's most pressing social issue. The German government's ambitious goal of constructing 400,000 new homes annually, which included 100,000 social housing units, proved unattainable due to high construction costs and interest rates. The ifo Institute reported that in 2023, only 245,000 new apartments were built, with projections for 2024 falling to 210,000. This supply shortage, coupled with high demand, led to skyrocketing rents across the country.
  
  The crisis was most acute in large municipalities and university towns. The housing market in Berlin was significantly strained by the proliferation of short-term rentals through platforms like Airbnb, combined with new rental prices averaging twice that of older contracts. The government's attempts to mitigate the crisis, such as extending rent freeze laws until 2029, were often circumvented through loopholes particularly for new, modernized, or partially furnished buildings and apartments. Consumer and retail sectors similarly struggled as households, burdened by the cost of living crisis and increasing housing costs, tightened their spending. Younger consumers, in particular, faced increased debt levels, leaving them with less disposable income for discretionary purchases.
  
  German industry associations expressed concern that the crisis could create a domino effect of widespread economic damage by deterring crucial skilled workers from abroad from Germany's labor market, while also potentially pushing voters towards political extremes. The crisis also led to a surge in homelessness, with some regions reporting a tenfold increase in just a few years. Organizations aiding in navigating the difficult housing market such as the Deutscher Mieterbund (German Tenants' Association) saw record membership levels. Concurrent with the declining business climate, employment in Germany fell at its most rapid rate in four years. This trend was observed in private sector surveys, indicating a broader economic slowdown.