Building prices: Building in Germany is likely to become even more expensive

Construction prices in Germany are expected to rise again this year. Last year they rose by 6 percent, said the general manager of the Central Association of the German Construction Industry, Felix Pakleppa, the German Press Agency.

“That was the strongest increase in over 20 years.” This year, the association expects growth of 4 percent. “That means it’s calming down a bit, but prices are still rising.” It is not foreseeable that the level before the pandemic will be reached. “And that’s mainly due to the sharp rise in material prices.”

By far the most expensive timber has increased in price. Prices almost doubled in 2021, Pakleppa said. “For plastic and insulating materials it was around 30 to 40 percent, for steel 70 percent.” Since the turn of the year, construction timber has become somewhat cheaper. “We are now up 89 percent compared to the pre-pandemic period, so it is still at a very high level.”

Californian houses with wood from Germany

From the point of view of the Central Association, there are various reasons for this. More damaged wood in Europe due to the bark beetle plague is one thing, the significant increase in demand last year after the slump due to the 2020 pandemic is another. The US also imported more wood from Europe after US tariffs made Canadian wood significantly more expensive, Pakleppa said. “As a result, many wooden houses in California were built with wood from Baden-Württemberg.”

There would also be inflation, energy prices and wage increases, said Pakleppa. The construction industry is in a balancing act. “On the one hand there is the goal in the coalition agreement that 400,000 apartments should be built a year and that you can rent apartments at affordable prices.” On the other hand, there are ambitious goals in the areas of sustainability and climate change. “Requirements like this also make construction more expensive because we have to build with better energy efficiency.”