Institutes call for tax cuts
Construction prices for residential buildings are rising sharply
4/6/2023 9:53 am
Although the price increase in the construction costs for residential houses is slowing down, the dream of owning your own home is still becoming more expensive. Concrete and roofing work in particular is a financial blow to the office.
The prices for the construction of new houses continue to rise sharply. The new construction of conventionally manufactured residential buildings rose in February by 15.1 percent compared to the same month last year, as reported by the Federal Statistical Office in its quarterly statistics. Last November there was an increase of 16.9 percent. In May 2022, there was a 17.6 percent increase, the strongest in more than 50 years. From November to February alone, construction prices increased by 2.7 percent.
The enormous increase in costs threatens to lead many home builders and investors to refrain from planned projects – especially since not only do more materials have to be paid for, but interest rates have also risen noticeably. “Excessive land, existing property and building prices, which have developed in the course of the long phase of low interest rates, are now facing a correction,” write the leading economic research institutes in their joint diagnosis for the federal government. “Until this has been completed across the board, the demand for construction work will hardly pick up again – despite the urgent housing shortage in some places.”
As a countermeasure, the institutes propose reducing the real estate transfer tax, which has been rising in almost all federal states for years. Structural work on residential buildings cost 13.7 percent more in February than a year earlier. Concrete work rose particularly sharply by 15.2 percent. For masonry work, prices rose by 12.7 percent. For roofing and roof sealing work, they increased by 17.1 percent, while carpentry and timber construction work only increased by 3.0 percent. The prices for finishing work increased by 16.0 percent, for heating and central water heating systems by 18.2 percent.
New office building prices also rose in February, up 15.5 percent year-on-year. The increase in commercial buildings was 15.4 percent and in road construction 17.9 percent. All information relates to construction work on the building, including VAT.