Housing construction lags behind

Housing construction should actually be the engine of the construction and real estate industry. New flats are urgently needed, especially in the metropolises. But the situation is tense. Expensive energy and high inflation are driving up the price of materials, delivery bottlenecks are causing delays and the increased interest rates are making financing more difficult. The number of building permits is declining. Orders are being cancelled.

From January to July 2022, a total of 187,561 dwellings were approved. This was two percent or 3,807 dwellings less than in the same period of the previous year. The number of building permits for single-family homes fell particularly sharply by 16.1 percent. This was mainly due to the expiry of the "Baukindergeld" (children's building allowance). Families with children could apply for state subsidies if they had obtained a building permit for owner-occupied residential property by the end of March 2021. The Baukindergeld contributed to the fact that almost 7,400 more single-family homes were approved in the period from January to March 2021 than in the first three months of 2022. For two-family homes, the number of approved homes remained almost unchanged. For multi-family houses, the number of approved dwellings increased by 7.1 percent.

Order cancellations continue to increase in the residential construction sector. In August, 11.6 percent of the companies surveyed were affected. This is the result of the survey by the Ifo Institute. A large number of companies fear a decline in business. The expectations indicator fell to minus 48.3 points, marking the lowest level since the survey began in 1991. The supply bottlenecks for building materials have improved somewhat. "Nevertheless, materials are still in short supply in many places and therefore expensive," notes Ifo researcher Felix Leiss. High energy prices make building materials - which are often energy-intensive to produce - even more expensive. Against this background, many construction companies are planning further price increases.

Originally, 400,000 new dwellings were to be built every year so that bottlenecks would be reduced and the market would stabilise. The enormously strong price increases of real estate in recent years are now being slowed down by the high interest rates, but flats will continue to be scarce and expensive.

(Photo: © F. Muhammad, Pixabay)