Europe's housing crisis: an opportunity for timber construction?

Permits fell further than in the financial crisis

After the ECB's rapid monetary tightening in response to inflation in 2022/23 and rising construction costs, residential building permits in Germany, France and Finland fell by 40 to 70 percent. The slump is comparable to the 2008 financial crisis and in places more pronounced. Timber construction suffered too, but slightly less: in Germany, permits for timber buildings dropped by 36.5 percent in 2023, against 38.6 percent overall. The timber share therefore rose from 21.3 to 22 percent.

New, sustainable and energy-efficient construction is an important long-term investment at every level.

Growing demand and falling rates

At the same time, populations are growing, in Germany and Finland partly through immigration from Ukraine. Germany's housing shortfall is estimated at around 700,000 units, while the current permit rate produces only about 220,000 a year. Instead of the targeted 100,000 social housing units a year, 20,000 to 30,000 are being built, and in Paris the supply of rental flats halved in 2023. Industrial and modular timber construction, with shorter planning and building times, can help close such gaps. According to Charrey, the ECB's first rate cuts, to 3.5 percent, give reason for hope, including for listed timber construction companies.

How Timber Carbon sees it

When housing construction recovers, the choice of materials will shape the climate footprint of hundreds of thousands of new homes. Timber Carbon, launched in 2026 as a spin-off of Timber Finance, quantifies, certifies and monetises the carbon removed in mass timber buildings as carbon removal credits on the voluntary carbon market. How timber compares with low-carbon concrete is the subject of Charrey's later Holzkurier article Decarbonising buildings.