Residential Housing Construction in Shrinking Regions: Negative Development or Necessity?

Abstract

Although former East Germany has had continuously shrinking populations for many years, flats have been simultaneously newly built and torn down nationwide, according to the development program of the Federal Government and the states. This housing policy was previously considered a negative development. The consequences of demographic change show parallel development of residential housing construction and demolition. This is not unusual, nor a negative development. The structures of demand and supply can deviate from each other due to changing population structure, especially because flats are immobile and durable consumer goods. The development of stable housing markets in shrinking areas is a special challenge for housing and public policy. This paper uses the example of Saxony to illustrate the challenges faced by regional housing markets where demographic change is occurring and discusses the background and connections. The current development of residential housing construction is unsatisfactory and vacancies are increasing, which leads to another question: how can future housing needs be satisfied while simultaneously avoiding the consumption of new land for housing?