Construction costs are currently skyrocketing

2022-06-28 13:09:29

a very nicely succinctly formulated sentence that summarizes many things correctly from the mEA ... unfortunately :eek: But what is the outlook of your crystal ball, for example for 2027 (with the ECB continuing its chaotic approach)?

A recession next year or even this year would of course be better from our perspective as builders. Interest rates cannot rise any further because German government bonds will fall, which they already are by the way. Additionally, there is little demand for building materials due to job losses among potential builders or in difficult times people hold on to their money and do not build because the job does not seem secure. What happens afterward we know; see 2009 and 2021 how prices and the economy surged. One possible scenario is the degradation of German industry caused by the lack of cheap Russian resources. Then no one would build anymore.

2022-06-28 13:32:05

I think many here (myself included) often only have peripheral knowledge and know individual areas in the economic context. For example, supply and demand determine the price, the money supply determines inflation, etc. Currently, many factors come together that connect economic thought models so strongly that you can quickly lose clarity. In addition, many look at the current situation. However, the stock market already prices in expectations. An EXPECTED shortage can therefore already lead to higher prices. Personally, I believe that inflation is currently by no means due to the money supply. Even though it is immense. Rather, I see the aforementioned supply shocks, which drive prices entirely independently of the money supply. Or expected supply shocks.. Therefore, I also do not see a major risk of a wage-price spiral, since inflation in my opinion is decoupled from the money supply. The interest rate increase, together with the expiration of the suspended insolvency obligation, can nevertheless lead to a rapid market correction and recession. This could free up skilled workers and theoretically also lead to falling prices, IF it weren’t for the material shortage that will keep prices high. Likewise, labor costs will rise due to inflation. But as I said, I am far from having clarity and even if I did, there are massively different opinions here. In any case, it remains exciting

2022-06-28 13:38:08

I think many here (myself included) often only have marginal knowledge and know individual areas in the macroeconomic context. For example, supply and demand determine the price, the money supply determines inflation, etc. Currently, however, many factors come together that link the economic thought models so strongly that you can lose clarity very quickly. In addition, many look at the current situation. However, the stock market already prices in expectations. An EXPECTED shortage can therefore already lead to higher prices. Personally, I believe that inflation is currently by far not due to the money supply. Even though it is enormous. Rather, I see the aforementioned supply shocks, which drive prices completely independently of the money supply. Or expected supply shocks.. Therefore, I also see no great danger of a wage-price spiral, as inflation, in my opinion, is decoupled from the money supply. The interest rate hike, together with the expiration of the suspended insolvency obligation, can still lead to a rapid market correction and recession. As a result, skilled workers could become available and in theory also lead to falling prices, IF it were not for the material shortage that will keep prices high. Likewise, labor costs will rise due to inflation. But as I said, I am far from having clarity and even if I did, there are massively different opinions here. In any case, it remains exciting

I see it the same way, in my small bubble (family, friends, widely spread clientele from all areas of the economy) the economy is still booming like crazy. Expensive vacations, shopping without regret, etc. A real decline in demand is not visible. On the other hand, the shortage of skilled workers is becoming increasingly apparent. In other words, the only surplus is that of labor :oops:

2022-06-28 13:48:17

I see it the same way, in my small bubble (family, friends, widely diversified clientele from all sectors of the economy) the economy is still booming like crazy. Expensive vacations, purchases without remorse, etc. A real decline in demand is not discernible. On the other hand, the shortage of skilled workers is becoming increasingly clear. In other words, the only surplus is that of work :oops:

Sort of – I see it like you do in many areas. Only at my father-in-law’s car dealership do I see a significant decline in demand. The cars stay on the lot longer and sales numbers are dropping significantly.

2022-06-28 13:50:59

On the topic of existing properties
Berlin metropolitan area, my small personal search area of 2km around a popular single-family house neighborhood. In the last 2 years, the supply consisted of just a handful of properties and was immensely overpriced. Currently, the supply is growing day by day. Now between 20 and 30 single-family houses. The prices are still overpriced, but by far not as much as 6 months ago. The development is drastic and noticeable.

2022-06-28 14:00:53

Expensive vacations, shopping without remorse, etc. A real decline in demand is not apparent.

Maybe because there is still money, people have been frugal the last 2 years.. at the travel agency the advisor recently told me "you know, as long as someone pays 8000 euros for Mallorca for 2 weeks, the chaos and the price will remain."

But what I also observe is that in the daily newspaper many more one-man businesses craftsmen/illegal workers are looking for work.

Construction costs are currently skyrocketing

danielohondo

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