According to a study, not only in Germany but also in Europe, significantly fewer apartments will be completed by 2025. Compared to 2022, a decline of around twelve percent is to be expected, as shown by the calculations published on Wednesday by the Euroconstruct research group, to which the Munich Ifo Institute belongs. “In addition to the abrupt turnaround in interest rates and the jump in costs for construction work, the general uncertainty about the medium-term development of real estate prices among builders and interested parties is causing pronounced reluctance,” said Ifo construction expert Ludwig Dorffmeister on the study of 19 countries.
An above-average decline of 32 percent to around 200,000 apartments is forecast for Germany, Europe’s largest economy. A similarly strong slump in completed apartments can also be expected in Sweden (minus 39 percent), Denmark (minus 33 percent) and Hungary (minus 29 percent) in the years 2023 to 2025. “Currently, only around a third of the country experts are reporting on attractive new construction funding,” said Dorffmeister on the forecast of the research group. Positive impetus, on the other hand, comes from Ireland (plus 17 percent), Portugal (plus 15 percent), Spain (plus 12 percent) and Slovakia (plus 11 percent), according to the forecast.
According to the Ifo business survey, the lack of orders in German residential construction has recently worsened. 34.5 percent of the companies surveyed reported in June that they had too few orders. This is the highest value since April 2010. With 19.2 percent, a new record was reached for the cancellation of existing orders. In order to at least partially compensate for the foreseeable slump in private construction investments, the Institute for Macroeconomics and Business Cycle Research (IMK), which is close to the trade unions, advocates a noticeable increase in public spending on social housing. These are rarely built by private property developers due to the high construction and financing costs.