Residential construction in Germany continues unabated. In July, 40 percent of the companies surveyed by the Ifo Institute complained about a lack of orders. In June it was still 34.5 percent. “A storm is brewing. After a long boom, the higher interest rates and the drastically increased construction costs are literally choking off new business,” said Klaus Wohlrabe, head of the Ifo surveys, on Monday. At the same time, projects are constantly being cancelled. Around 19 percent of companies complained about canceled projects in July. The long-term average was only 3 percent.
Many companies are still living on backlogs of orders, for others the situation is already becoming threatening. Every tenth housing construction company reported financing difficulties. “Under the new conditions, many projects are no longer profitable for investors, and private builders are also having increasing problems getting financing,” said Wohlrabe. A majority of companies are anticipating a further slowdown in the coming months. “On the one hand, existing orders are continuously being cancelled, on the other hand fewer and fewer new orders are coming in,” said Wohlrabe. The business expectations were at minus 52 points.