The number of residential building approvals in Germany rose by 8.4 percent to 309,000 in 2015, the highest in 15 years, the Federal Statistics Office said on Thursday.
Europe's largest economy is experiencing a construction boom as record-low borrowing costs encourage many Germans to overcome their traditional aversion to buying their own flats and houses, with some also regarding property as an attractive investment.
Rising state spending on refugees and special tax incentives for investors who build flats in urban areas are expected to give the construction sector an additional push.
In 2015, authorities issued permits for 268,000 new residential buildings and approved construction work at 41,000 existing buildings, the Statistics Office said. The total number of 309,000 was the highest since 2000.
"Today's figures show the positive trend will continue," Construction Minister Barbara Hendricks told Reuters when asked to comment on the latest data. "Construction activity is going in the right direction. But this is still far too little."
Especially lower-income families, but also increasingly households with average incomes, have difficulty finding affordable housing, the minister said.
"The strong influx of refugees is increasing the demand for housing in addition. We therefore need at least 350,000 new homes a year," Hendricks said.
More than a million migrants arrived in Germany last year, most fleeing war and poverty in Syria, Iraq and Afghanistan. With many still sleeping in makeshift accommodation, there are growing concerns about how to house them permanently.
Even before the refugee numbers started to increase last summer, there was an estimated lack of 800,000 affordable flats in urban areas. With demand outstripping supply, property prices and rents have soared in cities like Berlin, Hamburg and Munich.
The Bundestag lower house of parliament on Friday will debate the government's draft law to let investors reduce their tax bills by deducting a third of their construction costs over three years as long as they build flats in areas where local authorities say the housing shortage is most acute.
The incentive is expected to lead to the construction of up to 100,000 additional flats. Hendricks has also called for the government to double its already increased funding for public housing to 2 billions euros per year until 2020.
Construction accounts for 4 percent of German gross domestic product (GDP) and, with 2.5 million people working in more than 300,000 companies, it is a major employer.
The booming construction sector is currently one of the main growth drivers in Germany. In the last three months of 2015, construction investment and state spending were the two biggest growth contributors while net foreign trade was a drag.
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