Construction costs are currently skyrocketing

I am now here less and less for various reasons. (Like!)

To come back once again to the realities on the construction sites.

Construction activity and the entire construction sector have now completely collapsed. Projects, whether large or small, are largely being canceled. As feared, it is not only single-family homes that are affected but the entire market for residential properties as well as commercial construction.

Wienerberger, for example, is implementing short-time work in its plants. Concrete plants are closed. Sand and gravel can no longer be sold; suppliers no longer know where to put it. Manufacturers of windows and doors, for example, are also already doing short-time work.

You hardly see concrete mixers or building material transports on the roads anymore. Meanwhile, some assume a decline in the construction industry of 50 percent, in some areas even an astounding 70 percent.

Last year, Germany recorded an increase of 1.5 million refugees. These are people urgently seeking housing. However, there are hardly any new construction projects. The costs are simply too high.

We are miles away from the 400,000 new apartments planned annually. And interest rates will continue to rise. After a short pause, inflation in Germany has strengthened again. Food inflation rose to 13 percent in May.

Anyone who still wants to build should hurry and secure the currently very favorable interest rates. Prices will fall significantly in the coming months, which in turn will make building cheaper again.

For various reasons, I am increasingly less present here nowadays. ( Like!)

To return once again to the realities on the construction sites.

Construction activity and the entire construction sector have now completely collapsed. Projects, whether large or small, are largely being canceled. As feared, this affects not only single-family homes but the entire market for residential properties as well as commercial construction.

Wienerberger, for example, has short-time work in its plants. Concrete plants are closed. Sand and gravel can no longer be sold, suppliers no longer know where to put it. Manufacturers of windows and doors, for instance, are also already doing short-time work.

You can actually hardly see concrete mixers or building material transports on the road anymore. Meanwhile, some are assuming a decline in the construction industry of 50 percent, and in some sectors an astonishing 70 percent.

Last year, Germany recorded an increase of 1.5 million refugees. These are people urgently looking for housing. However, there are hardly any new construction projects. The costs are simply too high.

We are miles away from the 400,000 new apartments planned annually. And interest rates will continue to rise. After a brief pause, inflation in Germany has intensified again. Food inflation rose to 13 percent in May.

So anyone who still wants to build should hurry and secure the currently very low interest rates. Prices will fall significantly in the coming months, which will then again make building cheaper.

Who is surprised? Fighting inflation through monetary policy always means combating inflation by generating unemployment. The collapse in the construction industry was already visible months ago with the help of the Federal Statistical Office. After clearing a backlog of orders, it is now hitting hard.

Otherwise, producer prices have been falling month after month for months. Of course, this is not visible in a consumer price index that always compares end-customer prices with the same month of the previous year.
In Germany, people are quite keen to fear a figure that is hardly capable of reflecting a dynamic.

Prices will drop significantly in the next few months, which will then make construction cheaper again.

I really can't imagine that construction prices will drop significantly in the next few months. No question, residential construction has completely collapsed and companies are reconsidering their plans. At the same time, there are currently more government contracts than before, especially renovation projects.

Yes, the general contractors currently have to see where they stand and whether they simply continue with the same program as if nothing had happened. The executing companies still cannot complain about a lack of work and accordingly set their prices.

Regarding the mentioned areas of concrete, sand, gravel, windows, doors: absolutely agreed. Building a shell structure is definitely inexpensive at the moment. But in finishing work, I do not yet see a significant reduction in excess demand. What is lost due to the indisputably existing slump in new construction is more than compensated for by renovations.

Bla bla bla bla

Hey Durran, well attempt no 9?

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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