Construction costs are currently skyrocketing

Bla bla bla bla

Hey Durran, well attempt no 9?

----------------------

Single-family houses are going down yes - public and commercial construction, on the other hand, insanely much... Also, not all trades are getting cheaper... Heating installers, for example, I can imagine 0% discount... Our general contractor is currently building you a single-family house from summer 2025 as it is fully booked until then (almost only commercial)

I browsed through Wirtschaftswoche a bit today. There were just two free articles on the topic of the construction crisis, one was a crisis article about Helma Bau, who apparently seem to be struggling hard right now, and the other was an interview with Deutsche Reihenhaus. They apparently had significantly increased cancellation rates at times, but:

>> In the meantime, reports Arnold, the cancellation rates have returned to a normal level, the shock paralysis is dissolving. Buyers have arrived "in a new normal." However, these are now different buyers – who previously had rather looked for a single-family house. And now downsize to a more affordable terraced house.<<

I just found that quite interesting. I had suspected that this would happen sooner or later (i.e. people looking for something smaller or downsizing). It is probably currently an advantage for those in the affordable segment, who still find customers, while it is thinning out further up.

When I look around our immediate vicinity, I notice that many scaffolds are erected on older houses. Energetic renovation everywhere… many changes of ownership, insulation, new windows, roofs, photovoltaics… moving in the right direction

The wave of cancellations in [Öffentliche und Gewerbebau] is just starting, due to the extremely increased costs.

There may certainly also be some regional differences. However, the group of people who still want and above all can finance such high sums is likely to be greatly limited. And the price erosion is unlikely to make the situation any easier.

As one hears, there has never been such a strong and sudden slump in construction before. At least no one can remember it.

An acquaintance in the [Raum Nürnberg] has had his semi-detached house listed online for just under 700k for 3 months. So far, no inquiries from interested parties. It was built in 1996 with a gas heating system. There are long faces at the moment. Just a few months ago, the house would probably have been sold in a bidding process within a few days.

When I look around our immediate vicinity, I notice that many scaffolds are erected on older houses. Everywhere there is energy-efficient renovation... many changes of ownership, insulation being installed, new windows, roofs, photovoltaics... going in the right direction

Yes, and that does not contradict the observations in the shell construction sector at all.

The public and industrial sectors plan much more long-term anyway. Recently, planning for a school involved only point-to-point cabling for all sensors in the classrooms. Private individuals would build a bus system; the state says: "It has such a long lifespan, how am I supposed to know if anyone will still supply something for this bus in 30 years." So copper goes into the walls without end. Budget? Doesn’t matter.

But for the shell builders, that is not much work. They can at most do renovation now, and in this area there is enough work for the next few decades.

So now it is July, let's gladly look at the end of the year to see whether construction prices really collapse as partly predicted here. I don't believe in that.

The politically demanded 400,000 new apartments, targeted annually, cannot be achieved. Maybe half of that will be managed with great difficulty.

For this reason alone, there will be an even more severe housing shortage. In fact, the new heating law leads to further increases in construction costs.

The construction of an apartment in a multi-family house today costs around 300,000 euros. To build cost-neutrally here, a net cold rent of 18 euros per square meter must be generated. So far, housing companies have calculated costs of 230,000 euros and then 11 euros NKM. The problem is that no one can pay this 18 euro cold rent per sqm anymore. Therefore, no new construction is planned at current prices.

However, when one hears that 1.5 million people immigrated to Germany in 2022, resulting in net population growth, one sees the dramatic nature of the figures. Similar numbers are expected for this year.

Housing shortage ahead! Exploding rents ahead!

What would help here? Experts suggest lowering the property transfer tax. I think little of that. It will bring nothing in the short term.

In my opinion, it only works if many small landlords are strengthened and additional housing is created with tax incentives.
By burdening landlords with the costs of the heating and energy transition, nothing will come of it. Rather, the opposite will happen.

How about requiring the construction of one or more granny flats when building a single-family house and renting them out, as part of the building permit? Of course combined with subsidies and tax components.

I myself, as a landlord, just had to pay a not insignificant sum of taxes. I cannot build reserves. Investments can only be offset through depreciation. Where is the money for new investments supposed to come from? I could still convert an attic and thus create 4 more apartments. My capital for this now partly lies with the tax office. I like to pay taxes, but it must remain within reasonable limits.

The planned installation of heat pumps alone will consume the entire investment capital of the large housing companies.
There is no money left for anything else. Incidentally, not even for new housing construction.

And again. There are still demolition premiums from the state and demolition continues unabated. Without replacement new buildings.