Cancellations, high costs and expensive financing: German housing construction is looking to the future with worries. The business expectations index for the industry fell to minus 65.6 points in February, as reported by the Munich Ifo Institute. That is the lowest value since the survey began in 1991. “There is fear in housing construction,” said Ifo researcher Felix Leiss.
For some time now, orders in residential construction have been canceled much more frequently than before. 14.3 percent of the companies reported this in the current survey. A comparison with the years from 2012 to 2019 shows how high this value is, when it never exceeded 3 percent. And even at the peak of the Corona slump in 2020, the value remained in the single digits. However, this has changed since the first half of 2022.
“New business is suffering greatly from the significantly higher interest rates and the increased construction costs,” said Leiss. “On average, the order books are still well filled, but a number of companies are already complaining about a lack of orders.” Currently, 23.4 percent of the companies reported a lack of orders. A year ago it was only 9.5 percent.
