Charles Kingston, CEO & Editor, REFIRE Ltd.
History has provided several notable instances of where census errors had significant consequences. The 1870 U.S Census, for example, severely under-counted the population in the post-Civil War South, affecting the allocation of seats in the House of Representatives and the distribution of federal funds. It took decades for the under-represented African Americans to claw back resources that had been denied them as a result of the mis-count.
India’s first census in 1871 failed to acknowledge the linguistic diversity among the country’s vast geography, leading to the gathering of very inaccurate data. The subsequent influence on British colonial policies led to large misunderstandings about the local populations and fuelled widespread inequities. As late as 2016, an online system failure in Australia led to the census website crashing on the critical night, producing data that was highly compromised, and skewing subsequent allocation of funding to various regions. Other notable examples are in Canada in 2011, and in Nigeria in 2006, where mistakes in the counting ended up fanning the flames of racial tension and sparked violent aggression between aggrieved local tribes.
While these historical examples highlight the far-reaching impacts of census errors, even a meticulous country like Germany is not immune to such discrepancies. Germany has now discovered that it officially has 83 million inhabitants, not the 84.7 million it was thought to have. The latest census results show that on 15th May 2022, 82.7 million people lived in Germany. On that day, 10.9m foreign citizens lived in the country – nearly 1 million less than are officially registered. Of course, not every foreigner officially de-registers when they leave the country, which is understandable. They may simply want to spend more time in the Greek or the Turkish sunshine, and never quite make it back to Germany to log out.
But the population discrepancy has caused a flurry of dissent in German government and media circles as it raises questions about the true need for new house-building and the extent of the housing crisis. A newly-published study suggests that the housing shortage is much lower than popularly imagined, asking, basically, – crisis, what crisis?
At one end of the spectrum is the research group Empirica and its pugnacious CEO Reiner Braun, who has traditionally taken a contrarian stance towards popular housing assumptions. Empirica argues we really only need 170,000 new housing units annually, and only 160,000 from 2028 - but crucially, they have to be built where they are actually needed, and not - as now - in the wrong places, where they don’t help to combat the shortage. Empirica claims that in 2022 a total of 115,000 units, or 40% of all new-builds, were built in ‘the wrong places’, that is, mainly in rural regions with shrinking populations.
The government’s own annual target – now laughingly discredited – is for 400,000 units yearly, Respected research groups such as Bulwiengesa identify an annual shortage of up to 420,000 units until 2028, while lobby groups such as the ZIA claim a looming shortage of up to 800,000 units in total by that point. Whatever the actual figure is, it is clear that in the biggest cities, where the highest demand for new housing is, there is chronic undersupply.
Vonovia boss Rolf Buch hits back hard
One man who knows a lot about the real demand for housing in the big cities is Rolf Buch, the boss of Germany’s (and Europe’s) largest private landlord, Vonovia. He laughed at Empirica’s forecasts and suggested that Mr. Braun show up to witness the reality on the ground at a Vonovia apartment viewing. The thousands of hopeful contenders looking for an affordable place to stay would make a mockery of the research group’s pie-in-the-sky prognosis, he scoffed. Empirica is just headline-grabbing, and playing down “one of the greatest social problems of our time”.
Empirica’s Braun appears to have backtracked somewhat since then, claiming he has been misconstrued and Empirica’s findings taken out of context. Be that as it may. We expect that the academics will be splitting hairs over this debate for years to come. But we believe Buch when he talked this week to journalists about insolvencies in the building sector. “It’s going to get bitter”, he said, “We will see an extremely high number of bankruptcies in the coming months and possibly next year”. He added that the housing crisis would continue to worsen over the next two years, with the mechanics of the rent index alone ensuring that rents would continue to climb, with the higher new rents then feeding into the revised rent index.
In very outspoken comments, Buch warned that rising housing costs were becoming “true social dynamite”. Within a few years, tenants would be effectively locked out of expensive cities such as Munich, he said, with the looming real threat of a two-tier housing market and deep social divides in Germany.
The situation hardly looks more promising in Berlin, Germany’s largest city, where the number of building permits has been tumbling steadily month by month for the last two years. The city’s population, which we found out this week – Surprise! – was 3.6 million rather than the previously assumed 3.87m, is headed for about 4.5m by 2040, fuelled by war refugees, an ageing population, and other immigration.
But Berlin’s public administration is notoriously disfunctional, with the 12 districts in permanent conflict with the governing Senate over development plan procedures for housing construction.
The number of ‘development plans’ approved by Berlin last year plunged to the lowest level since 2002, at a rate of about one per month (abysmally low). The districts have the power (to sit on applications, for example), but no fiscal responsibility to make things happen. That power resides with the finance senator, and he’s not giving it away.
The so-called Faster Construction Act won’t kick in for years. A lack of staff capable of acting as an interface between offices and the political leadership simply adds to the logjam. Builders know which districts to avoid in submitting their project applications. In Steglitz-Zehlendorf an average planning application takes 126 months. That’s more than ten years. If you think that’s bad, we’ve just read about an application in Neukölln which was submitted in December 1963. It was finalised in April 2019, after a total of 664 months. Who needs a more accurate Census when you’re up against this?
