For many custom home builders, the dream of owning your own four walls is now shattered. Construction costs are rising. The industry is worried – also about the construction of new apartments.
In the face of rapidly increasing costs, the construction industry is afraid of housing construction in Germany. Tim Oliver Müller, managing director of the construction industry association, sees two reasons for this.
Either the projects no longer paid off or rising construction costs and interest rates blew up household budgets already burdened by exploding energy costs.
According to data from the Federal Statistical Office, construction prices rose slightly more slowly in August, but the level is still high. The new construction prices of conventionally produced houses increased by 16.5 percent compared to the same month of the previous year. In the previous reporting month of May, the increase in a year was 17.6 percent.
Material shortage causes high cost increases
Scarce and expensive materials are among the reasons for the increase in costs. The price increase in August was particularly strong for the following civil works in the building:
- Roofing and roof sealing business: plus 19.6 percent
- Carpentry business: up 19.6 percent
- Concrete works: up to 18.2 percent
According to Müller, 17 percent of residential construction companies surveyed in the Ifo business survey in mid-September said they were affected by cancellations. This is the highest rate since 2012 when the question was first asked. The decrease in incoming orders also worries the industry. Mueller warned:
Not just for economic reasons, but because the urgent need for living space, especially in the social sector, has to be met.
400,000 new apartments per year: Construction Minister Geywitz confirms target
In the coalition agreement, the federal government set itself a target of 400,000 new apartments per year. Federal Construction Minister Klara Geywitz (SPD) recently confirmed the target despite the challenging environment. However, experts from the real estate sector expect a decline in new construction this year.
Müller called for funding for new construction and renovation, as well as tax investment incentives. Reducing construction costs and standardizing government building codes through the use of industrial production methods are also necessary.