In the mid-1980s the housing market was slack. Thereafter, however, hefty increases in income, demographic shifts and high immigration generated a strong rise in demand that could not be matched by supply. Between the beginning of 1989 and the end of 1995, immigration alone led to a population increase of about 3.8 million. The consequence of this explosive increase in demand for housing was an acute shortfall in supply, especially in the conurbations of the west.

Between 1989 and 1994, housing construction in Germany increased steadily. The phase of increased investment pushed the number of completed new units to very high levels. Starting in 1996, however, a decline in investment in residential construction was projected for Germany as a whole, for the decline in the west could no longer be counterbalanced by the continued strong growth in the east. In the territory of the old Federal Republic, the number of completed new units rose steadily from 1992 to 1994 (1992: 374,575; 1993: 431,853; 1994: 505,179). In 1995 it declined slightly to 498,543, and lower figures are pre dieted for 1996 and 1997. In the new federal states, the number of completed new units rose from a low of 11,477 in 1992 to 104,214 in 1995. High figures are anticipated for 1 996 and 1 997 as well.