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German builders can't meet demand despite more homes completed

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A residential building under construction in Laatzen near Hanover, northern Germany. Demand for property is soaring in Europe's biggest economy due to a growing population, increased job security and record-low borrowing costs.

Berlin

GERMAN builders completed nearly 285,900 new dwellings last year, the highest number since 2002, data showed on Wednesday, but construction still fell short of expectations and may not ease a drastic shortage of affordable housing.

Demand for property is soaring in Europe's biggest economy due to a growing population, increased job security and record-low borrowing costs.

With demand outstripping supply in many urban areas, property prices and rents have soared in cities like Berlin, Hamburg, Munich and Frankfurt.

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The Federal Statistics Office said that builders last year completed the construction of 250,100 new residential units, finished the renovation of 31,300 existing dwellings and built 4,500 units for non-residential purposes.

The total of 285,900 units was a rise of 0.4 per cent on the year and was the highest figure since 2002. Construction was one of the drivers of a rebound in economic growth in the first quarter.

Property experts say Germany needs to build at least 350,000 new homes every year to ease the shortage of affordable housing.

"The latest figures on completed dwellings show there is no end in sight for the housing shortage," said Andreas Ibel, president of the BFW construction and property association.

To reach the government's target of 375,000 new dwellings a year, an annual increase of 33 per cent is needed, Mr Ibel said.

He called on the government to cut red tape for builders and on local authorities to provide more land for construction.

The housing shortage has become a hot political topic in Germany, with some left-leaning politicians calling for private landlords to be expropriated.

In Berlin, activists have started collecting signatures to force a local vote on a motion that would require the city to take back properties from any landlord that owns more than 3,000 apartments.

Polls suggest such a measure could pass, forcing the city to consider spending billions of euros buying back privatised housing instead of funding the construction of new social housing units. REUTERS