The high prices for energy and materials and the rise in interest rates are depressing demand for residential construction and are causing problems for the construction industry. Orders in the German construction industry and real sales fell in August, as reported by the Federal Statistical Office. “We see with great concern an increasing slump in incoming orders in residential construction,” said Felix Pakleppa, general manager of the Central Association of the German Construction Industry (ZDB).
According to data from the Federal Statistical Office, the industry received a price-adjusted 6.0 percent fewer orders in August than in the previous month. Compared to the same month last year, there was even a decline of 15.6 percent. In the first eight months of the year, the price-adjusted order intake fell by 5.2 percent compared to the same period of the previous year. The main construction trade includes the construction of roads, railway lines and lines (civil engineering) and buildings (structural engineering).
The companies had to accept losses in ongoing business. In August, price-adjusted sales in the main construction trades were 5.1 percent below the figure for the same month last year. Due to the sharp rise in construction prices, nominal revenues rose significantly by 11.2 percent compared to the same month last year. From January to August, price-adjusted sales fell by 4.3 percent, nominally they rose by 11.5 percent.
Political target too ambitious
The order figures are not a good omen for the current year, said the President of the German Construction Industry Association (HDB), Peter Hübner. In residential construction, you can already feel a de facto slowdown in investment – incoming orders here in August fell by 24 percent in real terms. In view of the high construction prices and the sharp rise in interest rates for real estate loans since the beginning of the year, builders have become increasingly cautious.
“We fear that the public sector – in view of the high expenditure to compensate for increased energy costs – will now save on construction investments and will not be able to compensate for the inflation-related price effects,” said Hübner.
“It is becoming increasingly clear that the political claim to build 400,000 apartments per year will not work,” said Pakleppa, ZDB’s general manager. Residential construction now urgently needs the announced gas price brake.” The pressure of material prices on construction prices must be reduced.
New climate requirements are added
According to the will of the Council of Member States, only climate-neutral residential buildings should be allowed to be built across the EU from 2030. Minimum standards for energy efficiency are also to be set for existing houses and apartments, as the Council announced on Tuesday after a meeting of the ministers responsible for energy issues. These aimed to make the entire building stock in the EU emission-free by 2050. Many owners could therefore face extensive renovations in the medium term.
The agreement reached by the energy ministers will now form the basis for negotiations with the European Parliament. A final decision on the planned tightening of specifications for the overall energy efficiency of buildings must ultimately be made by both institutions.
The consultations in the Council of Ministers were based on very far-reaching proposals from the EU Commission. According to them, particularly poorly insulated buildings should actually have to be modernized by 2030. According to the Commission, buildings are responsible for around 40 percent of energy consumption and around a third of greenhouse gases in the EU. The new requirements should therefore also be an important building block for meeting the climate targets. These stipulate that the EU will become climate-neutral by 2050.