Few materials, high costs: Construction prices are rising even faster

Status: 01/10/2023 11:14 a.m

Building in Germany remains comparatively expensive, and the rise in prices has recently accelerated again. One reason: scarce and expensive materials. Roofing work is particularly expensive.

The prices for the construction of new residential buildings are rising again due to material and energy costs. According to the Federal Statistical Office’s quarterly statistics, new construction of conventionally manufactured residential buildings rose by 16.9 percent in November compared to the same month last year.

In August 2022 there was still an increase of 16.5 percent after the strongest increase in more than 50 years of 17.6 percent was determined in May 2022. From August to November alone, construction prices rose by 2.5 percent.

Many projects put on hold or cancelled

The enormous costs threaten to cause many house builders and investors to hold back on planned projects, especially since construction loans have also become noticeably more expensive. “The price explosion for building materials – especially in the first half of 2022 – could not be shouldered by the construction companies alone,” said Tim-Oliver Müller, general manager of the German Construction Industry Association.

In order not to get into financial difficulties, the companies should have taken the increased prices into account when calculating the costs of new projects. “However, the resulting increase in construction prices is a boomerang for new residential construction,” said Müller. “Many projects were initially put on hold or even cancelled.” Incoming orders fell by 14 percent in real terms in the first ten months of 2022.

The construction and real estate industry is therefore warning of a slump in residential construction in Germany. “All signs indicate that there will be a dramatic slump in 2023,” said an appeal published in December by the 17 leading associations and chambers of the construction, planning and real estate industries. The traffic light coalition’s goal of building 400,000 apartments a year “is threatening to become wishful thinking.” In the next few years one could be happy if there were 200,000.

Offices also cost more

Structural work on residential buildings cost 15.8 percent more in November than in the previous year. Concrete work increased in price by 17.6 percent. For masonry work, prices rose by 13.6 percent. Roofing and roof sealing work increased by 20.3 percent, carpentry and timber construction work by only 5.1 percent. The prices for finishing work rose by 17.8 percent.

New office building prices also rose in November, up 17.8 percent year-on-year. The increase in commercial buildings was 17.6 percent and in road construction 19.3 percent. All information relates to construction work on the building including VAT.

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