Citi analysts said in a research note Friday that they believe housing shortages in Germany are likely to intensify.
The investment bank stated that this will result in an increase in prices and rents, which will absorb greater shares of household income.
The firm noted that the construction of new apartments is running at half the pace the government had planned, intensifying shortages ahead. Only 18,200 new residential building permits were issued in February, 40% less than the record in February 2021.
"Building permits continue to point to much weaker residential construction investment as well, although mild weather will probably have favoured a strong start to the year," said Citi.
They added: "The annualized run-rate of building permits so far this year is marginally 200k, about half the government's target of 400k new flats per year."