According to welt.de, the Munich-based economic research institute Ifo Institute anticipates that housing construction will continue to decrease in Germany. “The forecast is subject to some uncertainty, but it is quite clear that we will fall below the 200,000-mark by 2026 at the latest," Ifo construction expert Ludwig Dorffmeister is quoted as saying on welt.de. Germany is not the only country which faces such a situation. According to Euroconstruct’s projections, the number of new housing units will also fall sharply in the 15 Western European countries.
The Ifo Institute’s forecast is based on the sharp drop the number of building applications and housing construction permits. According to the Federal Statistical Office Destatis, 17,800 building applications were approved in Germany in May, i.e. almost 44% fewer than in the same month of 2022.
According to welt.de, new housing construction is negatively impacted by high inflation and the jump in interest rates. “In Germany, construction costs have gotten completely out of control and are preventing a recovery of the market,” Dorffmeister explains. Construction prices will likely rise further in the coming years. The Federal Statistical Office’s construction cost index shows that material costs are stabilizing following a previously sharp increase. However, labor costs are following suit at a similar pace. The collective agreement for the construction industry will result in further cost increases over the coming years, according to welt.de.
