Enlarge image
New building project in Frankfurt: target for residential construction is missed
Photo: Sebastian Gollnow / dpa
The construction industry was a pillar of the German economy for a long time and has earned well thanks to the real estate boom.
But now expensive materials and higher interest rates overwhelm many house builders and project developers.
Projects are cancelled.
The German construction industry warns of a slump in residential construction and calls for support from politicians.
In the corona pandemic and global financial crisis, there were large state investments by the federal government.
“If not now, when will politicians invest in construction?” Felix Pakleppa, general manager of the Central Association of the German Construction Industry (ZDB), told the dpa news agency.
The ZDB expects that 245,000 apartments will be completed in the coming year, around 12 percent less than forecast this year (around 280,000).
A shortage of housing increases the pressure on real estate prices and rents
The former goal of the federal government of 400,000 new apartments per year would thus be missed by far.
A tight supply of housing increases the pressure on real estate prices and rents.
In the meantime, the KfW development bank only provides funds for new buildings that meet the strict efficiency house standard 40 and have a quality seal for sustainable building.
In the future, the refurbishment of existing buildings in particular is to be subsidised, since the climate protection effect is much greater than in new buildings, according to the Ministry of Economic Affairs.
In a later step, the new building subsidy for 2023 is to be fundamentally redesigned.
EH40 means that a building uses only 40 percent of the energy that a standard home uses.
ZDB President Reinhard Quast called for new construction subsidies not to be reduced and planned special depreciation for residential construction not to be linked to the EH40 standard.
»Builders and construction companies are increasingly groaning under the political guidelines in the area of sustainability.« It is hardly possible to build cheaply.
»A square meter in residential construction costs around 4,000 euros.
It doesn't go below that."
Association calls for tax breaks
The ZDB, which represents around 35,000 medium-sized construction companies, proposed an extension of the special depreciation for new rental apartments.
"If it were possible to depreciate every apartment over ten years instead of the two percent that is currently the case at ten percent, that would give a strong boost to housing construction," said Quast.
For the state, however, this would mean billions in tax losses.
The Ifo Institute counts the construction industry among the »inflation winners«.
In construction, among other things, companies have increased prices significantly more than was to be expected due to higher wholesale prices alone.
The strategy consultancy EY-Parthenon does not assess the prospects in building construction as bad.
Despite all the hurdles, the volume of construction work performed will increase slightly this year, adjusted for price.
Construction companies could largely pass on higher prices to customers.
After stagnating next year, building construction will pick up again as early as 2024, according to EY Parthenon.
Material cheaper again, but wages are rising
After strong increases in construction prices, Quast sees at least some relaxation for builders.
While construction prices rose by a good 15 percent this year, the ZDB expects a smaller increase of 5.5 percent in 2023.
"We've peaked on some materials," Quast said.
Wood and steel have become somewhat cheaper, although significantly more expensive than a few years ago.
The situation has also eased somewhat for glass and ceramics.
Quast expects higher construction prices in the medium term, also due to rising wages for construction workers.
High electricity prices slow down heat pump plans
Another important issue in construction is the energy supply.
Here the federal government relies primarily on heat pumps.
Despite the shortage of materials and craftsmen, the heat pump industry is also assuming strong growth for the coming year.
Around 350,000 devices are to be built and installed, according to the Federal Heat Pump Association.
Based on the forecast of 230,000 new devices this year, that would be an increase of 52 percent.
According to the association, manufacturers and trades are constantly expanding their range.
From 2024, the federal government wants 500,000 heat pumps to be installed every year.
By 2030 there should be a total of six million devices in Germany.
From the point of view of the association, a lack of material and bottlenecks among craftsmen could slow down the ramp-up.
The waiting times are already between six months and a year.
»We come from a production capacity that was previously designed for a market of 150,000.
But the demand is already running at 500,000," said the association's head of politics, Björn Schreinermacher.
Industry has made it clear that rapid expansion is possible.
The Central Association of German Electrical and Information Technology Trades (ZVEH) considers the federal government's target of six million to be realistic.
However, several adjustments have to be made at the same time: In addition to building up skilled workers and increasing efficiency through digitization, more incentives are needed from the federal government.
Looking ahead, the high electricity prices and declining subsidies are obstacles.
mmq/dpa-AFX
