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New buildings are 16.5 percent more expensive: Rising building prices are exacerbating the housing shortage

New buildings are 16.5 percent more expensive
Rising building prices exacerbate housing shortages

While the need for affordable housing is growing in many places in Germany, builders are increasingly being deterred by the sharply rising costs of constructing new buildings. With serious consequences: At the end of the year, there was a shortage of over 700,000 apartments in this country.

The cost of building new homes rose sharply again in August. The new construction of conventionally manufactured residential buildings rose by 16.5 percent compared to the same month last year, as reported by the Federal Statistical Office in its quarterly statistics. The increase has thus slowed down somewhat: in May 2022 there was still growth of 17.6 percent – the highest in more than 50 years.

From May to August alone, construction prices increased by 2.6 percent. The information relates to construction work on the building, including VAT. New office building prices also rose in August, by 18.0 percent. The increase for commercial buildings was 17.7 percent and for road construction 18.5 percent.

The high costs are likely to deter many builders, especially since loans have also become significantly more expensive. The need for new apartments is very high. The industrial union Bauen-Agrar-Umwelt is already warning of a shortage.

Housing deficit hits ‘sad peak’

“The housing deficit will reach a sad peak at the end of the year, when there will be a shortage of well over 700,000 apartments in Germany,” said IG-BAU national chairman Robert Feiger recently. Above all, there is a lack of affordable housing and social housing. The federal government must therefore stick to its goal of 400,000 apartments per year, 100,000 of which are social housing. “More cheap rental apartments on the market are dampening rents, and increased housing construction is also boosting the economy,” emphasized Feiger.

Shell construction work on residential buildings cost 15.5 percent more than in August 2021. Concrete work was particularly expensive at 18.2 percent. For masonry work, prices rose by 13.1 percent. For roofing and roof sealing work, they even increased by 19.6 percent, while carpentry and timber construction work only increased by 2.3 percent. The prices for finishing work increased by 17.4 percent.

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