The construction industry is more skeptical about the current year. The industry association is preparing for the loss of at least 10,000 jobs. And the housing construction targets of the traffic light government are also likely to be missed by a long shot.
The construction industry has revised its business expectations for the current year downwards. They are now expecting a four percent drop in revenue and the loss of 10,000 jobs in 2024, said the president of the HDB industry association, Peter Hübner, in Berlin today. The HDB started the year with a sales forecast of minus 3.5 percent. “We are in the fourth year of weakness in the construction industry,” emphasized Hübner. “There will be no turnaround this year either.”
Fewer public construction projects expected
But why is the construction industry so pessimistic about the future? It is primarily public construction that is causing concern for the industry. The federal government, states and municipalities are expected to reduce their investments in public construction projects this year due to the expected lower tax revenues. Instead of a slight increase, the HDB now expects a decline of 0.5 percent.
Housing construction in particular is currently experiencing drastic declines. In this sector, sales – adjusted for rising prices – are set to fall by twelve percent, stressed Hübner. According to the forecast, the only growth area will be commercial construction, with sales increasing by 1.5 percent. The reason for this is large orders from Deutsche Bahn, the electricity network operators and local public transport.
Only 250,000 instead of 350,000 new apartments
In fact, investments are important right now, stressed the HDB. In a commissioned report for the industry, the German Economic Institute (IW Cologne), which is close to employers, assumes that spending on housing construction alone would have to increase by around 20 billion euros each year, adjusted for inflation, measured against the 2022 level.
This is the only way to build around 350,000 homes each year. According to the report, this is how many new homes would have to be built every year until 2030 to meet demand. But the industry is a long way from such numbers. “In 2024, the number of completions could fall to less than 250,000 units,” the institute explained.
Industry and experts demand Reducing bureaucracy
The institute also sees an increased need for investment in federal roads and motorways. “Without improving the infrastructure, Germany’s competitive position cannot be improved, and without more investment in the building stock, the climate protection goals cannot be achieved,” explained IW study author Michael Voigtländer.
Association President Hübner believes that politicians have a duty to act, as the excessive bureaucracy is a major hurdle for the industry. “No industry is as heavily regulated as construction: the picture is characterized by a wide range of constantly changing government regulations, outdated rules and barely digitized public administrations.” The IW also advocates loosening regulations in construction and thus increasing the productivity of the industry – for example through serial construction.