Massive decline feared in residential construction

The business expectations of construction companies in Germany have reached a negative record of minus 60.9 points for the coming six months since the ifo Institute began its survey. The number of cancellations in residential construction is currently on the rise again. In November of this year, 16.7 percent of companies in Germany were affected, compared with 14.5 percent in the previous month. This is reported by the Deutsche Presse-Agentur with reference to the ifo Institute. Although companies still have well-filled order books, the ever-increasing construction prices, higher interest rates and fewer subsidy options are weighing on new business and have already led to a conspicuously high number of cancellations for several months, said Ifo researcher Felix Leiss in Munich. He added that many companies had to raise prices further despite weakened demand in order to pass on high material and fuel costs to customers. As a result, construction prices continued to rise. The Central Association of the German Construction Industry (ZDB) expects only 245,000 homes to be completed next year, a good 12 percent fewer than in the current year. This would be the third decline in succession. This would fall far short of the German government's target of 400,000 new homes per year. Strategy consultancy EY-Parthenon sends positive signals. It expects a decline in the volume of new residential construction in 2023 for the first time in many years. For 2024, however, the experts expect growth again in all segments. According to EY-Parthenon, the volume of construction services provided in 2024 is likely to grow by 1.3 percent year-on-year after price adjustments.