The truth about the traffic jam at the construction site: craftsman boss explains price jump development

Created: 07/12/2022, 09:35

The construction costs have recently risen noticeably.

For example, the construction of a single-family home is up to 20 percent more expensive than at the end of 2021 (symbol image).

© Soeren Stache/dpa

The energy crisis has led to enormous inflation in the construction sector.

In an interview, Bavaria's Chamber of Crafts President takes a position and explains the background to the inflation.

Munich - Franz Xaver Peteranderl is President of the Chamber of Crafts for Munich and Upper Bavaria (HWK) and President of the Bavarian Trade Day (BHT).

Peteranderl is familiar with the construction industry in Bavaria, in Garching he runs a construction business in the second generation.

We spoke to him about the current construction situation.   

In conurbations like Munich there is a lack of living space, new buildings could eliminate the shortage.

But is there still construction going on?

Franz Xaver Peteranderl:

Objects that have already been started will continue.

But wherever there has only been planning up to now, the reticence is palpable.

What does that mean specifically?

Peteranderl:

The start of construction will be postponed.

You can see that in the current building permit figures: they are declining.

What are the causes?

Peteranderl:

Building has become more expensive.

On the one hand, the personnel requirements of the construction companies can no longer be covered in a timely manner.

Second, disrupted supply chains have led to price increases.

Thirdly, the high energy costs have also made construction more expensive.

And interest rates have risen sharply.

Construction cost inflation: single-family house around 20 percent more expensive than a year ago

How has the price of a single-family house developed?

Peteranderl:

Roughly speaking, a single-family house should now cost between 15 and 20 percent more than it did a year ago.

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And where is there a lack of material on the construction sites?

Peteranderl: Things

are currently tight when it comes to chemical precursors, such as bitumen.

In addition, gravel and sand are gradually becoming scarce.

But as before, everything is available.

The only question is when the goods will arrive – and at what price.

Does the construction site now have to be regularly rescheduled?

Peteranderl:

That can happen in individual cases.

But most companies have started planning enough buffers during the construction phase.

This also makes construction more expensive.

In addition, possible alternative preliminary products are agreed with the client before construction begins.

Landfills in Bavaria: “Politics have not solved the problem over the years”

Has energy-efficient construction also pushed up costs?

Peteranderl:

Yes, of course.

At the moment, for example, it is difficult for me to get hold of photovoltaic systems.

This can mean that the scaffolding has to stand six to eight weeks longer - and that also makes construction more expensive overall.

The problem of a lack of landfills has also worsened.

Why?

Peteranderl:

The landfills in Bavaria are full in many places, and politicians have not solved the problem in recent years.

On average, disposal products are now driven around 200 kilometers to the nearest landfill.

Some excavated material from Upper Bavaria is even transported to Saxony and disposed of there in the overburden pits of Lusatia.

With several truckloads per house, the rise in diesel prices is quickly noticeable.

What are the effects of higher interest rates?

Peteranderl:

Of course they play a significant role.

In the spring I paid one percent, now it's between three and four percent.

Private individuals can often no longer keep to their tight financing plan.

With what consequences?

Peteranderl:

I know of a case where a private builder had his excavation filled in again.

He actually wanted to build a single-family house, but the financing was not yet secured.

A mass phenomenon?

Peteranderl:

No, fortunately these are isolated cases.

But at the moment we see that the start of construction being postponed by a few weeks or months more often.

Inflation in the construction sector: heat pump problem and shortage of skilled workers

The federal government wants 400,000 new apartments to be built every year.

What would have to be done for this to succeed?

Peteranderl:

That would only work with better depreciation options and higher funding.

Investors only go into residential construction if they see a certain chance of a return.

And politicians should now basically say clearly where the construction journey should go.

What do you mean by that?

Peteranderl:

For example, how the energy transition will continue.

Apparently, the current federal government, for example, is fully committed to heat pumps.

It is completely unclear whether the power grids can even withstand the massive operation of heat pumps - especially when everyone in the new development area also wants to charge their electric car at the same time.

It must also be clear whether gas or oil heating will be banned in the foreseeable future and if so, when.

The sooner politicians provide clarity, the better for everyone involved in construction.

However, a central problem still remains unsolved.

Which?

Peteranderl:

The need for skilled workers in the executing trade.

Because somebody has to

B. install the heat pumps.

Politicians must do their part to ensure that these skilled workers are available in the future.