Plus of 8.8 percent
Housing costs are slowly declining
7/10/2023 10:06 am
The price increase in residential construction weakened in the second quarter. The prices for the new construction of conventionally manufactured residential buildings rose by 8.8 percent in May compared to the previous year. The IFO Institute still expects a sharp decline in residential construction.
The rise in prices for the construction of new houses in Germany has slowed down. According to the Federal Statistical Office’s quarterly evaluation, new construction of conventionally manufactured residential buildings rose by 8.8 percent in May compared to the same month last year. Last February there was an increase of 15.1 percent. From February to May, construction prices increased by 0.8 percent.
The IFO Institute also expects a sharp decline in residential construction due to the sharp rise in costs. The Munich researchers predict that only around 245,000 apartments will be completed in new buildings this year and only 210,000 in 2024. In 2025 – together with the other completions – there should only be around 200,000 residential units. That would only be half the target set by the federal government. “The most important reason for the decline is the significant increase in the cost of financing and construction work,” said IFO construction expert Ludwig Dorffmeister. “At the same time, the federal government has drastically cut back new construction subsidies and tightened the standards for new construction again at the beginning of 2023.”
Structural work on residential buildings cost 5.4 percent more in May than a year earlier. Concrete work became more expensive by 2.8 percent. For masonry work, prices rose by 7.4 percent. For roofing and roof sealing work they increased by 10.8 percent, for earthworks by 9.4 percent. Carpentry and timber construction work, on the other hand, became cheaper by 2.7 percent. The prices for finishing work increased by 11.7 percent, for heating and central water heating systems by 14.9 percent.
New office building prices also rose in May, up 9.0 percent year-on-year. The increase in commercial buildings was 8.0 percent and in road construction 10.5 percent. Maintenance work on residential buildings (excluding cosmetic repairs) cost 11.7 percent more than in May 2022. All information relates to construction work on the building, including VAT.