Compact instead of spacious living - is this the future?

Berlin. Federal Building Minister Klara Geywitz (SPD) is trying to ease the precarious situation on the housing market with numerous funding programmes. In order to receive state subsidies, energy efficiency standards are a prerequisite in many of the current programmes. Geywitz's latest subsidy programme"Climate-friendly new build in the low-price segment" (KNN), which was launched on 1 October, also has a different requirement - which is rather unusual by German standards.

The subsidy programme, which is intended to create incentives for the construction of flats in the lower and middle price segments, sets clear specifications for living space. If builders or first-time buyers want thesubsidised loan 100,000 per residential unit, a flat that only has one so-called individual room - i.e. a bedroom or children's room - may not be more than 40 square metres in size.

The maximum size is 55 square metres for two rooms, 70 square metres for three rooms and 85 square metres for four rooms. Slightly different specifications apply to wheelchair-accessible flats.

With the maximum limits, the ministry is addressing a critical point: Despite the current housing shortage, the average living space required by every citizen increased by around 37 per cent between 1991 and 2021.

According to the Federal Statistical Office, the average living space per capita in 2022 was 55.4 square metres. At 65.1 square metres per person, owner-occupied households lived much more generously than tenant-occupied households with 48.5 square metres per capita.

In new builds, the size of the living space is no longer solely a question of the user's preferences. In view of rising construction prices and financing costs, developers now have to calculate exactly how much living space is economically feasible for them.

This is why there is a trend in cities towards more efficient and space-saving flats. Micro-apartments, which are primarily aimed at people living alone, are particularly popular with investors. One to two rooms, around 18 to 35 square metres in size - this is a rough description of a micro-apartment.

The furnished mini-apartments often have additional services such as a fitness centre or communal areas - and can belet at significantly higher prices than regular flats.

George Salden, CEO of property developer and investor Capital Bay, advocates moving away from the idea that living space ends at the front door. "The question is: do people need a living room if they have spacious communal areas? Do they need a washing machine if there is a laundry room in the house? A study if there are co-working spaces?" said Salden recently.

Reduction in living space: population sceptical

A family flat can be realised on 65 square metres and a single flat on 20 to 25 square metres if the flat is functionally designed, says the investor.

It's not just investors who are in favour of mini-apartments. Sustainability experts have also been calling for years for less space and resources to be used for housing in order to protect the climate.

However, the idea of voluntarily reducing one's living space seems to be less popular among the population. At least that is what an international study involving the Research Institute for Sustainability - Helmholtz Centre Potsdam (RIFS) suggests.

Little enthusiasm among residents for smaller living space

In workshops in Germany, Latvia, Sweden, Spain and Hungary, a team of scientists analysed the conditions under which people would be prepared to voluntarily reduce their living space. The willingness was low in all countries. In Germany, a quarter of participants could imagine downsizing.

Respondents in all countries expressed concerns about downsizing. "They feared a restriction of their personal freedom and privacy and described the housing market as difficult. People who buy a home see it as a long-term investment that is also associated with social status," says study author Matthias Lehner from Lund University.

However, according to the researchers, some factors could make the reduction in living space more attractive. In addition to cost savings, these include a green, liveable environment with many leisure and community facilities such as sports facilities, play areas for children or barbecue areas.

Specifications for new construction, too little movement in existing buildings

In order for people to move to a smaller flat, you have to offer them something. This is especially true for those for whom their home has become too big, for example because the children have moved out. For them, theThe expense of a move is often too greatThe benefits are too small and the rent for the smaller flat is too high.

This means that a lot of potential remains unutilised on the housing market. OneStudy by the Cologne Institute for Economic Research showed last year that around six per cent of households in large cities had to cope with extremely cramped living conditions, while almost as many households lived in flats that were clearly too large. The authors of the study categorised a four-room flat for a single household as too large, for example.

The disparity is likely to increase, as the number of small households is on the rise. In 2023, only one person lived in around 41 per cent of households in Germany. According to the Federal Statistical Office, one- and two-person households together accounted for almost three quarters of all households.

Modelled on Switzerland: avoid under-occupancy

In Switzerland, many housing co-operatives have been resorting to more radical means for some time now - even though aStudy by the Zurich University of Applied Sciences shows that the willingness to downsize their own living space is also low among the Swiss.

According to a survey commissioned by the Swiss Federal Office for Housing, occupancy regulations already applied to 70 per cent of cooperative flats in 2012. They regulate the minimum number of people who can live in a flat. In many cases, there may only be one more room than there are residents in the household. This means that at least three people must live in a four-room flat.

Under-occupancy has consequences. At the Kalkbreite co-operative in Zurich, for example, those affected initially pay an income-related rent supplement. After two years at the latest, they must then leave the under-occupied flat, even if the cooperative has not found another flat for them in its own portfolio.

This text was first published on 27 September 2024 in theHandelsblatt premium business newsletter "Inside Energy & Property" published.