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Germany has a housing problem and its economy is slowing

Post-WWII Germany is rightly renowned as one of the great success stories in the last half of the 20th century. Along with Japan it is held as an example of what industrious, conscientious people can learn from history and do to rebuild their shattered countries.
In the process, the Germans have developed a reputation for precision, careful planning, financial sense and a high quality of life. Citizens of other nations have the notion that as participants in one of the world's economic powerhouses, Germans are affluent.
So, tourists were taken aback in April when Germans went to the streets to protest against a lack of housing. In cities around the country, tens of thousands of protesters held rallies against what many of them called "rental insanity". They were protesting not only the price of housing but lack of availability. With as many as 20 hopeful tenants often queuing for a single small apartment, landlords demand onerous guarantees, paperwork, financial statements and even payments for renovation work at the renter's expense.
As well, the key word "rent" is also remarkable. About half of all Germans do not own homes and instead rent. They have the lowest home ownership rate in Europe, according to the EU statistics agency Eurostat.
The phenomenon even has a term used by some: "Poor little rich Germany".
By comparison other developed European countries such as Spain and Italy have ownership rates surpassing 70 per cent, while in the US it is about 65 per cent.
April's rent protests came as the German government cut growth forecasts for the second time this year, down to 0.5 per cent for 2019, the lowest in Europe other than Italy.
The German economy is greatly reliant on auto manufacturing, but its famed brands are facing a fundamental change with the rise of electric cars and ever-tightening vehicle emissions control. The changes have been in the winds for years, leaving many to now ask about Germans' much-vaunted ability to plan.
On the ground today, some of the luster is off the post-WWII "economic miracle".
"It's striking - Germany is one of Europe's wealthiest nations, but we have very low homeownership rates," Pekka Sanger of the German Economic Institute told broadcaster Deutsche Welle.
He said Germans have felt secure without owning homes due to the country's social safety net and pensions. Other factors include high interest rates, demands for huge down payments from banks and a cultural stigma against debt - there is no word for mortgage in the German language - perhaps linked to the hyperinflation of the 1920s that played a part in the upheaval that followed.
Those with little choice but renting face a shortfall in housing estimated at one million units. For young people striking out on their own, it can create barriers to professional and personal development. The lack of affordable housing also results in what is called "overburden" - when people spend more than 40 per cent of their income on housing. Germany has the fourth-highest rate in Europe.
A more recent shock was Germany's flirt with recession at the end of last year. Its economy stagnated at the end of 2018 as the country trailed most of its peers in the Euro area with a GDP decline of 0.2 per cent compared to the fourth quarter of 2017. The slowdown is expected to continue due to uncertainty in the global economy, trade disputes and weakness in manufacturing.
BMW, for instance, posted a loss in first quarter of 2019 for the first time in a decade. Price competition and spending on new technology cut into profit, it said in a statement. The luxury carmaker said the economic backdrop is "increasingly challenging" and business conditions are "expected to remain volatile".
Like other carmakers around the globe it is facing increasing pressure to develop electric and autonomous driving vehicles. Few automakers are ahead of the curve in addressing the disruptive change.
With manufacturing and exports crucial to its economy, Germany is the third largest exporter following China and the US, ahead of Japan, and often has the highest trade surplus in the world.
But perceptions can again be misleading. Often equated with manufacturing, Germany is not the only European manufacturing powerhouse. The UK, France and Italy also have global capacity.
According to a survey by Bloomberg, Italy was the top contributor to the Eurozone's industrial output in January and February. In Italy, manufacturing, not fashion or food, leads the way in exports. And it too runs a strong trade surplus.
Germany does continue to shine in providing jobs to its workforce and has the lowest unemployment rate among the major countries in the EU. Its social contract with its citizens seems to be based on steady employment, healthcare, a work week of 40 hours or less and a reliable pension.
There is little doubt that modern Germany holds high ideals in caring for its citizens. Utopia is a long way off, but it is among the countries leading the world in trying to get there. But as the English of old said "a man's home is his castle"- inviolate, safe and secure. We all need one we can afford.
Jon Van Housen and Mariella Radaelli are editors at www.luminosityitalia.com