Cost explosion – housing construction collapses

Industry associations see a massive slump in residential construction in Germany by 2023 at the latest. They see this as being caused by both a shortage of materials and a sharp rise in prices. In addition, funds for the new KfW subsidy were completely used up after just a few hours. This means that no more funding is available for residential construction.


Residential construction – prices for construction industry no longer calculable

The costs of new construction projects are thus not calculable either for private builders or for housing companies. It is also becoming increasingly difficult for construction companies to prepare appropriate offers for future construction projects. After all, no one knows how costs will develop in the coming months. The director of the Bavarian Housing Industry Association, Hans Maier, told the Deutsche Presse-Agentur: “There will be slumps, and quite significant ones.

Cost explosion - housing construction collapses. Costs no longer calculable. Many construction companies no longer accept orders
Cost explosion – housing construction collapses. Costs no longer calculable. Many construction companies no longer accept orders

Massive slump expected in social housing construction

A spokesman for the North German sister association VNW expressed similar concerns: “86 percent of the housing cooperatives and socially oriented housing companies in Northern Germany currently rate the prospects for new construction as poor or very poor. 60 percent therefore want to postpone the start of new construction projects or are still uncertain.”

The two associations mainly represent representatives of the social housing sector, such as corresponding cooperatives and municipal housing companies. As a result, the crisis in housing construction also mainly affects social housing or housing in the lower rental price segment. A lack of expansion of these apartments will inevitably lead to further increases in rents in the conurbations.


Building materials dealers only sell building materials at current daily prices

The order books of nationwide construction companies are currently still well filled. However, in a survey conducted by the German Construction Industry Federation, 90 percent of companies see problems due to the price increases and 80 percent complain about existing supply bottlenecks. In the meantime, many distributors of the required building materials are only selling their goods at the current daily price.

A spokesman for the Bavarian construction guild said: “It’s a situation like we’ve never had before. We have a huge wave of orders, and at the same time there is a shortage of raw materials. We have massive price increases every eight weeks.” According to the construction industry, there is currently a shortage of steel, as well as aluminum, wood and material for thermal insulation. In addition, there are massive price increases for glass and ceramics.


Many construction companies no longer accept orders

The construction projects in the order books of the construction companies were for the most part completed months ago at fixed prices before construction began. Due to the massive increase in material costs, many companies are in danger of making heavy losses. According to the German Construction Industry Association, more than 30 percent of construction companies are therefore no longer accepting new bids. Many smaller companies, which still have many fixed-price contracts on their books, are also threatened with insolvency as a result of the price increase.

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