In brief

• Advisers to the German Ministry of Economics warn that expensive housing limits occupational mobility and makes it harder for companies to hire.
• People changing jobs often have to pay higher rent or cannot find a vacant flat.
• Municipalities hesitate to designate new land, because they must finance infrastructure for new residents.

A housing brake on the economy

High housing costs are no longer only a social problem and are becoming a risk to the competitiveness of Germany (Marktbericht: Teurer Wohnraum bremst Deutschlands Wirtschaft – tagesschau.de). The Wissenschaftlicher Beirat, a body of economists advising the Bundeswirtschaftsministerium, warns in its expert opinion (gutachten) that the shortage of flats limits occupational mobility and makes it harder for companies to recruit workers.

Moving for work is getting more expensive

People moving to a new job have to pay higher rent or cannot find a vacant flat (Reiche-Berater: Teurer Wohnraum bremst Wirtschaftswachstum – augsburger-allgemeine.de) (Bau: Reiche-Berater: Teurer Wohnraum bremst Wirtschaftswachstum – ZEIT ONLINE). According to the advisers, such a situation discourages consumers from changing their place of residence, which slows the flow of labour to where it is needed most.

Rental costs block career plans

High housing expenses burden household budgets, and the expert opinion (gutachten) states that they make it harder to move to a more productive position. A person considering a job change must reckon with a greater burden on their budget.

Municipalities fear the costs of new land

The reluctance of some local governments to increase the supply of housing stems from a cost calculation. A municipality that designates new land for construction must later finance the infrastructure: road connections, kindergartens and schools.

Supply versus public services

Local governments must choose between building new housing and financing public services for the incoming residents.