New construction plunged in Germany during the first half of the year, data on Thursday showed, the latest sign of stress in the property market of Europe's largest economy.
New building starts were down 47% in the first six months, compared with the average of the past two years, with an even steeper 54% fall in home building, according to Bulwiengesa, a property consultant and analysis firm.
The data underscore a steep rut that dominates the nation's real-estate sector in its worst crisis in decades.
"There's strong caution in project development," said Sven Carstensen, chief executive of Bulwiengesa.
Germany - like markets elsewhere - is undergoing a major change of fortune after an end to the era of cheap money that fed a decade-long property boom. The industry now faces insolvencies, fizzling transactions and falling prices.
The nation's property industry will ask the government for multi-billion euro support at a meeting with Chancellor Olaf Scholz in September, Reuters reported last week.
"The situation is dramatic," said Jan-Marco Luczak, a parliamentarian who has pushed for a property tax cut demanded by industry. "I hear from more and more property developers that they are already laying off staff."
The city of Frankfurt, famous for its skyline and home to the European Central Bank, is feeling the crunch.
Marcus Gwechenberger, a member of Frankfurt's city council who oversees urban planning, said some building had been delayed because developers hoped costs would go down.
"Developers used to call here every two days and asked when we could finally get building approval," he said. "Now they're not pushing like that anymore."
Bulwiengesa also found that the volume of property under development was down 1.6% during the first half of the year compared with a year earlier, with steeper declines in larger German cities.
Residential development was down 6.7% in the biggest cities and hotel development down 12.1%, it found.
Financing has become more difficult for developers.
Florian Schwalm, a consultant with EY, said one of his clients was told that its bank would now only finance half its project, forcing the developer to either find a co-investor or sell half.
"The German real estate investment market has ground to a halt," said Karim Rochdi, managing partner at Aventos, a real-estate financial firm.
