Housing shortage in Germany – What we can learn from Roman heritage

At the turn of the year I had the privilege of visiting Rome – a city that has breathed history for thousands of years. As I walked through the Roman Forum, the heart of ancient Rome, one thing in particular struck me: the Romans knew how to build. Monumental temples, the mighty Colosseum, the imposing Pantheon – all evidence of a construction boom that once made the empire rich. Around 2000 years ago, Rome invested massively in infrastructure, housing and public buildings. Construction was not just a necessity, but a strategic driver of prosperity and growth.

And then I returned to Berlin – a city that is struggling with a completely different reality. Housing shortages, exploding rents and a construction industry that is stagnating despite rising demand. While in the Eternal City visionary developers once developed the city with state support, today we lack the right incentives to create urgently needed housing.

Currently, the construction backlog – that is, apartments that have already been approved but not yet built – in Berlin is around 20,000 units. Nationally, the figure is estimated to be around 250,000. So why is so little happening? The answer is clear: given the high construction costs and interest rates that are still too high, the existing state incentives for investments in new rental housing are simply far too low.

But a look at our recent history shows that things can be done differently. The reconstruction of the former GDR was only successful thanks to generous tax incentives. Private capital was mobilized with targeted incentives, and a housing boom followed. Why don’t we use this tried and tested instrument?

Let’s imagine that there was a special depreciation of, for example, 10% per year over ten years on new housing investments. In my numerous discussions with project developers and property developers, I was told that such an incentive would immediately stimulate the construction industry. Combined with energy standards and the obligation to rent out apartments for at least ten years, this could not only relieve the pressure on the housing market, but also serve to protect the climate.

Concerns about falling tax revenues are unfounded. A new construction boom would generate more revenue in the long term than the temporary losses caused by tax breaks. Jobs would be created, the economy boosted – a win for everyone.

But so far such an initiative has been missing from the political parties’ programs. The upcoming new elections offer a chance to change this. Which party will recognize the potential and have the courage to put the issue on the agenda in coalition negotiations?

It remains to be seen whether we will learn from history or continue to dream of solutions while the housing shortage becomes more and more urgent.

The Romans showed us how it’s done – it’s time we followed their example.

Ernst-M. Ehrenkönig · CEO & Managing Partner