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Housing shortage: War in Ukraine exacerbates housing shortage in Germany

2022-05-18T10:33:31.340Z

Russia's invasion of Ukraine has unforeseen consequences for the already strained German housing market: more and more construction projects are being cancelled.



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Often has to wait in this country: A construction worker

Photo: Julian Stratenschulte / dpa

A persistent shortage of materials and rising construction prices, more cancellations and the threat of short-time work: The war in Ukraine is hitting the German construction industry, which has been booming for many years, with full force and is causing the industry to have to drastically adjust its targets for 2022.

One only expects "a development between zero and minus two percent" for real sales, said President Peter Hübner of the industry association HDB on Wednesday in Berlin.

He described the situation as paradoxical.

"We want to build, we should build, but we often can't build." The reason for this is supply shortages for building materials and higher raw material prices.

This ensures that more and more clients are postponing projects or canceling them immediately.

90 percent of the companies feel the consequences of the war

At the turn of the year, all traffic lights for the construction were still on "green", stressed Hübner.

At that time, nominal growth of 5.5 percent was targeted for this year.

After deducting rising construction prices, this would have been an increase of 1.5 percent in real terms.

However, the Russian invasion of Ukraine completely changed the situation.

A third of the companies surveyed by the association purchase material from these two countries.

Nine out of ten companies complain about the direct or indirect effects of the war on their company.

The head of the Main Association of the German Construction Industry (HDB) drew a picture with gloomy prospects.

For 2023 he expects a similar decline in sales as in the current year.

"We hope that we can turn the whole thing back into positive territory in 2024." There is hope that the construction companies want to continue hiring despite the difficult situation.

920,000 employees are expected for 2022, which means an increase of 9,000 employees.

Hübner expects a decline in sales this year in the important housing sector, which has brought the industry growing business for years.

"This puts the goals of the federal government in question," warned the HDB President.

Because the traffic light coalition has set itself the goal of building 400,000 apartments a year.

The HDB only expects around 320,000 apartments this year, since the »Alliance for Affordable Housing« is focusing on refurbishing existing buildings instead of new buildings.

Concern about diesel prices

According to Hübner, the sales forecast is subject to the proviso »that there will be no further tightening of energy prices and the purchase of building materials in the course of the year«.

Because the expensive energy hit the companies enormously.

"For us, diesel is the mega topic." This dependency cannot be changed so quickly.

The industry cannot compensate for a 30 percent increase in energy prices.

In addition, one has to contend with price increases, companies can sometimes only calculate with daily updated prices.

Prices for welded wire mesh have risen by 70 percent within a year and for bitumen by 45 percent.

"Investors are currently highly sensitive," emphasized Hübner.

This applies above all to private builders and should also put a noticeable brake on residential construction in 2023, especially as lending rates rose.

Furthermore, there is hardly any improvement in sight for the material bottlenecks.

"The war brutally and ruthlessly exposes the tight supply chains and dependencies." This is evident in one of the largest steelworks in Europe, the Azovstal complex in Mariupol, Ukraine.

Where soldiers had entrenched themselves under fire from Russian troops, production should probably not take place for the time being.

"That's why there's a real supply shortage for steel,"

He advocated making Germany less dependent on other countries as a production location.

Therefore, one must be able to use more domestic raw materials.

Hübner criticized that this is currently hardly possible, primarily for environmental reasons.

beb/Reuters

Source: spiegel

All business articles on 2022-05-18

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