High interest rates, exorbitant costs and great uncertainty: Construction is no longer running smoothly. The companies warn: A lack of apartments could lead to serious problems.
In view of the lack of orders in residential construction, German construction companies have warned of the social consequences.
“The lack of living space leads to rising rental and purchase prices that no one can afford anymore. This not only leads to social unrest, but also to an increasing shortage of skilled workers,” explained the general manager of the construction industry association, Tim-Oliver Müller. The German Construction Industry Association (ZDB) called it a “question of social peace” to complete at least 400,000 apartments a year, as the federal government is aiming for.
Last year it was 295,300 units, and for months the number of permits and concrete orders in residential construction has been falling. At unchanged prices (real), 29 percent fewer orders were received in the first half of the year, according to figures from the Federal Statistical Office. Residential construction thus shrank more clearly than other construction sectors, since orders only shrank by an average of 13 percent.
“We need more and not less housing,” said ZDB general manager Felix Pakleppa according to the announcement. He called for political impulses on the demand side, since the “interest rate shock” will not go away on its own. These included special write-offs that are not subject to strict efficiency requirements under the EH-40 standard, as well as allowances for real estate transfer taxes.
Fewer orders for main construction trades
The construction industry received fewer orders in June. Adjusted for calendar and seasonal effects as well as price increases, companies received 2 percent fewer orders than in May, as reported by the Federal Statistical Office. Compared to the same month last year, orders were 2.7 percent lower. Residential construction was particularly weak with a minus of 12.3 percent.
For the first time this year, the slump in sales of the past few months on construction sites did not continue in June. Price-adjusted revenues were 2.2 percent higher than in June 2022. Including price increases, sales of 10.3 billion euros were 8.4 percent more than a year earlier.
In the entire first half of the year, however, the industry had to cope with a drop in sales of 5.5 percent in real terms compared to the previous year. However, the increased construction prices led to a nominal increase in sales of 5.5 percent to around 49 billion euros.