Why don't construction prices go down?

A buddy told me recently that the prices for stones and insulation are steadily decreasing. When I read some old posts from 2022, there is definitely some truth to it.

A friend recently told me that prices for stones and insulation are steadily falling. When I read some old posts from 2022, there's definitely some truth to that.

I agree with insulation... Although fluctuating within a certain range, depending on the product - but the trend is rather downward/stagnant. I don't see that for stones - due to all the CO2 surcharges, prices went up significantly again at the turn of the year.

Ehm now you’ve left me behind. I can’t follow anymore.

You wrote the following:

It’s very simple. Because we have high inflation.

But that is wrong. We don’t have high inflation. In some areas (producer prices) we even have deflation.

x-Flation is the changerate in % related to a period of time.

What you meant is the price level. You are right about that, but it explains nothing, because it just means: Things aren’t getting cheaper because they are expensive. Aha.

The rising price dynamics in the construction sector existed long before the consumer price inflation following Corona. Back then the afterburner was still ignited, but the music was clearly already playing before that.

In any case, it is too simplistic to say that construction prices are not falling in the current environment because there is inflation.

According to Capital, Baufritz is currently even doing good business because the target group apparently does not react particularly sensitively to rising interest rates - wow!

From what I hear otherwise, prices have already fallen from their peak in the sense that there is now room for negotiation, etc.

What surprises me a bit is that significantly lower prices have not really been advertised yet, as is currently the case with some car manufacturers. At best, there are promotions with %-signs, a sample voucher, or something like that.

Perhaps the companies have also made solid preparations and can (so far) weather the storm. Helma is also not bankrupt yet.

Yes, I also think it’s a matter of waiting it out. I’m currently in the process of getting quotes and negotiating, but no company is moving even a millimeter. If you look at the business figures and liabilities of the companies, they are anything but doing poorly. At least with the construction companies here in the region. You’d think they have nothing to do, but their order volume is at a record high, at least according to the business figures.

So the motto is really, I won’t make anything cheaper here, go somewhere else, but they won’t make anything cheaper either.

I work for a leading manufacturer of pipe and surface heating systems and am also directly involved in the calculation of production costs. Inflation plays no role at all. Production costs have been steadily decreasing since the end of 2022, simply due to falling raw material prices - our end products have about 70% material content. The (to a large extent) negotiated price increases that we enforced with our customers at the beginning of 2023 are of course not being passed on. That’s how business works - such phases are used to achieve results and build reserves.

I claim that manufacturers in almost all sectors could massively reduce selling prices and still achieve good margins.