The situation in housing construction is becoming increasingly dire. Recently, almost half of the companies in the industry complained about a lack of orders. The reason is the high construction and financing costs.
Lack of orders, many cancellations and a mood that is worse than ever: the situation in German housing construction is becoming increasingly murky. In November, 49.1 percent of companies complained about a lack of orders, as the Munich ifo Institute announced today. This means that the share has increased for the eighth month in a row – after 48.7 percent in October.
More than one in five companies had to accept order cancellations. The share was 21.5 percent in November, almost as high as the previous month (22.2 percent).
Business climate at record low
“Customers are leaving housing companies in droves,” said the head of the Ifo surveys, Klaus Wohlrabe. “The high construction costs and the current interest rate levels are causing many builders to despair.” Many projects are simply no longer worthwhile under these conditions and would have to be postponed or canceled.
For some companies, the weak new business is now slowly becoming dangerous. 11.1 percent of the companies surveyed reported financing difficulties. In October the share was still 9.9 percent. In addition, the business climate was at an extraordinarily weak minus 54.6 points, its lowest level since the survey began in 1991.
“The mood among the companies surveyed remains icy,” said Wohlrabe, commenting on the development. “There is no improvement in sight at the moment.”
Association expects job losses
According to the information, the current reports on the federal government’s budget crisis are unlikely to have had a significant impact on the survey results. The majority of responses were received in the first half of November. It is therefore not yet possible to predict how the insolvency of Signa Holding will affect the mood.
The construction industry is expecting job losses for the first time in many years. “For 2024 we expect a significant decline of around 30,000 employees with further downward potential,” said the President of the Central Association of the German Construction Industry (ZDB), Wolfgang Schubert-Raab.
In the last decade, 220,000 new construction jobs were created. In the coming year, the number of employees is expected to fall by almost 7,000 to 920,000. According to the ZDB, the reason is the slump in demand in residential construction, where rising interest rates are deterring investors and private house builders. This puts massive pressure on sales.