The meeting of politicians, ministries and industry at the chancellery is scheduled for Sept. 25 and will discuss a housing shortage in Europe's most populous country, a property crisis exacerbated by a collapse in prices.

Representatives of firms will appeal for support in the form of dramatic tax cuts and other measures, said the people, a step underscoring the growing sense of alarm in the sector.

Europe's largest economy 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.

Germany, whose population has recently grown as millions flock to the country, aims to build 400,000 apartments a year, but has struggled. One person familiar with the preparations of the meeting said the building effort, which had been hampered by war, inflation and an energy crisis, would be discussed.

The president of the German Property Federation, Andreas Mattner, is pressing the government to temporarily suspend a property sales tax and is demanding a low-interest rate credit program to support new residential building.

"I am worried because we are in a deep real estate crisis. And the real estate crisis needs clear, structured and downright radical steps to fix it," Mattner said.

Tim-Oliver Mueller, head of the German Construction Industry Federation, said he was also pushing for an emergency package of measures that would also include the cut-price sale of public land for building rentals.

Mueller said the various measures need the backing of Scholz personally because he ran for election on a platform of affordable rents and increased apartment construction. "He must act very urgently," Mueller said.

Germany's housing ministry, which coordinates the September meeting, said that it has already injected billions to help the sector.

Support remains unclear for abolishing the sales tax that generated 17 billion euros ($19 billion) in 2022, making it one of the most important sources of income for Germany.

Some prominent voices are signalling hesitancy. Danyal Bayaz, finance minister of the wealthy southwestern state of Baden-Wuerttemberg with one of the highest intakes of the property tax, said he didn't "know of any well-founded proposals for counter-financing".

Weakness in commercial real estate in the United States as offices remain empty after the pandemic and the unravelling in Sweden of one of the country's biggest landlords have globally called attention to distress in the sector.

For years, Germany's property market has been seen as a safe haven, becoming a major draw for foreign investors. But transactions have collapsed, down 59% during the first half of the year from a year ago, according to property consultancy, JLL.

Home prices dropped 6.8% in the first quarter, the biggest fall since Germany's statistics office began compiling the figures.

At stake is the health of Europe's largest economy, in which the property sector makes up roughly a fifth of economic output and one in ten jobs.

Recent data shows the stress the property sector is facing as the European Central Bank hikes interest rates, with little respite in sight.

New building permits in Germany dropped 27% during the first five months of this year, compared with the same period last year, data showed this week.

The fall is "catastrophic," said Andreas Beulich, head of the Federal Association of Independent Real Estate and Housing Companies.

Earlier this month, the property developer Centrum Group filed for insolvency, citing a "toxic triangle" of cost increases, higher interest rates and stalled investment.

Mathias Duesterdick, CEO of the property developer Gerch, called the turn of events worrying.

"This is only the beginning. We will see more insolvencies in the coming months," he said.

Other projects are getting scaled back. Germany's money-printing central bank, which calculates that property prices may be 40% overvalued, has cut back its own plans to expand its Frankfurt campus.

"It's hard to see light at the end of the tunnel for the property sector right now,” said Andreas Naujoks, partner at law firm Noerr in Frankfurt, who specialises in real estate.

Financial regulators in Germany are on high alert.

BaFin, the nation's financial watchdog, has identified property corrections as a top risk and is analysing bank lending for residential and commercial real estate.

In Frankfurt, Germany's banking capital and home to the ECB, multiple cranes swerve on the horizon as they construct additions to the city's skyline.

"But these are the projects that were launched in the last four to five years," said Simone Zapke, head of construction supervision in Frankfurt.

For the foreseeable future, building will remain in "a valley of tears," she said.

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