“If construction weakens, all other sectors have a problem”

The construction comes to a standstill. On the one hand, this is indicated by challenges such as energy costs, higher interest rates, material prices, stricter credit guidelines and a generally weakening economy. On the other hand, the companies in the construction industry are also more cautious, it was said today at a press conference of the Upper Austrian Chamber of Commerce (WK) in Linz.

“It’s the mixture of several factors that makes it so difficult at the moment,” said WK President Doris Hummer. She once again points out that more than 100,000 jobs in Upper Austria depend on the construction industry, including commercial enterprises. That is every fifth job in the commercial economy.

There have been signs of a downturn for some time, explained Hummer and the division heads Michael Pecherstorfer (trade and crafts), Michaela Keplinger-Mitterlehner (bank and insurance) and Christoph Schumacher (information and consulting). Residential construction investments have been declining since mid-2021. In the third quarter of 2022, non-residential investments and value added also fell. There are problems with private and social housing and with renovation.

This manifests itself in the companies: According to the current WK economic barometer, 61 percent of the surveyed construction companies expect incoming orders to fall in the next twelve months. 32 percent expect the order situation to remain the same, seven percent expect an increase. Schumacher: “If construction weakens, all other sectors have a problem.” This also included painters, carpenters, plumbers and electricians. Lead times in construction range from six months to a year.

Full books in previous years

The construction industry has done well in recent years and has defied the consequences of the corona pandemic in a number of areas, said Hummer. The books of many construction companies were full to bursting. The latest housing construction figures from Statistics Austria from November underpin this: around 71,000 apartments were built in Austria in 2021, around 3,200 more apartments than in 2020 and 2019 and more than since the early 1980s. In Upper Austria there were 13,267 apartments and thus the second most in Germany after Vienna (16,528).

However, as reported, the downturn was already apparent in the first half of 2022. The total number of building permits for residential units in Upper Austria (subsidized and privately financed) fell by 28.7 percent to 5155 compared to the previous year, according to figures from Statistics Austria.

In order not to leave any gaps, the WK stakeholders are calling for several measures: a new investment premium, a tightening of the investment allowance, a VAT refund, higher subsidy rates for thermal renovation, easier lending and a larger subsidy budget for social housing in Upper Austria .

On the latter point, there are good talks with the Housing Councilor Manfred Haimbuchner, said Pecherstorfer. The building guild and property developers also signaled readiness. A remedy has been announced for the end of January/beginning of February, it was said at the press conference.

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Martin Roithner

Editor Economics

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