“Housing shortage is becoming reality”
German construction struggles with missing orders
08/25/2023 12:06 p.m
The construction industry has been in crisis for months. In the first half of 2023, orders will drop significantly. The result: there is a lack of urgently needed apartments on the real estate market. Political support is to be presented in September.
Orders in German construction plummeted in the first half of the year, underscoring the crisis in the industry. Orders fell within a year – adjusted for rising construction prices – by 12.8 percent in real terms and by 2.2 percent in nominal terms, as reported by the Federal Statistical Office.
Adjusted for inflation, sales fell by 5.5 percent, but increased by 5.5 percent in nominal terms. “The slump in demand in residential construction is continuing,” said General Manager Felix Pakleppa from the Central Association of the German Construction Industry (ZDB). “For more than a year we have been seeing a significant drop in the number of building permits and incoming orders month after month.”
Pakleppa reiterated that the government urgently needs to take countermeasures and provide investment incentives. This is the only way to prevent weak demand from leading to job cuts. “Over the past ten years, we have created 200,000 jobs in view of the construction needs in housing, in infrastructure, in the climate and energy transition,” emphasized the lobbyist. “The construction companies now need the orders for the capacities that have been created.”
“Housing shortage is becoming a bitter reality”
“Residential construction is still in free fall,” said Managing Director Tim-Oliver Müller from the Main Association of the German Construction Industry. “If countermeasures are not taken soon, the housing issue will become a social dynamite. “Because first the building permits and orders would collapse, then the urgently needed apartments would be missing. “The lack of housing is becoming a bitter reality.” This leads to rising rental and purchase prices that no one can afford anymore, warned Müller.
Federal Building Minister Klara Geywitz wants to present an aid package for the ailing construction industry in September. In about a month, construction and politics will meet at a housing summit.