Economist calls for revival of scrapped Baukindergeld housing grant
An economist has urged the government to bring back a scrapped housing grant for families. The Baukindergeld scheme, which ended in 2021, helped households with modest incomes build or buy homes. Matthias Günther, a housing expert at the Pestel Institute, claims the programme delivered strong economic returns and should be revived to tackle the current housing shortage. The Baukindergeld was a grant run by the KfW development bank. It targeted families with children, enabling them to construct or purchase homes at lower costs. Research showed that recipients tended to build more affordably than other buyers.
Günther argues that the programme was abruptly phased out without proper assessment. He points to its financial benefits, claiming that every euro spent on Baukindergeld generated three euros in economic activity through increased construction. Now, he believes reintroducing it would be a cost-effective way to boost new housing supply. The economist also criticised the SPD’s recent proposal for a state-run housing company with private investors. Instead, he suggests the government could take over an existing firm like Vonovia. His reasoning is simple: a state-backed company should focus on affordable rents rather than profit demands.
Günther’s proposal centres on two key steps: restoring the Baukindergeld grant and repurposing an established housing provider. Both measures aim to increase construction while keeping costs down for renters and buyers. The debate comes as Germany faces ongoing pressure to expand its housing stock.
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