Improved Mood in Housing Construction - Order Situation Still Strenuous
Residential building's atmosphere lifts; challenging circumstances persist. - Navigating a positive atmosphere in housing construction remains challenging due to persistent supply chain problems
Got the scoop on Germany's housing construction sector? It's looking up, albeit slowly, according to Klaus Wohlrabe, Chief Surveys Officer at the Ifo Institute for Economic Research. Companies working in housing construction are maintaining a more positive outlook, especially when it comes to the future economic landscape of the field.
But hold onto your hard hats, folks, 'cause the current order situation ain't no walk in the park. According to the Ifo Institute, over half of the companies (51.2%) are still struggling to find ample work, with this percentage ticking slightly higher at 53.7% in March. To add salt to the wound, cancellations are on the rise as well; 10.4% of companies reported cancelled contracts, an increase of 2.6 percentage points from the previous month.
Setting the stage for a potential shift, the newly appointed Federal Minister of Housing, Verena Hubertz (SPD), is set to announce her program in the Bundestag on Thursday evening. In a recent interview, she hinted at state guarantees for financing new apartments, which could potentially stir things up in the market.
The current government has trumpeted the goal to build 400,000 new apartments annually, but this objective isn't explicitly stated in the coalition agreement between the CDU, CSU, and SPD.
Key Insights 📈
🏗️The order shortage in residential construction across Germany has eased somewhat but remains at an all-time high, with more than half of companies still grappling with insufficient demand (historical high of 57% in January 2025) - despite interest rate cuts by the European Central Bank, the situation has failed to show meaningful improvements.
📅 As of December 2024, 53.6% of German residential construction firms were still experiencing order shortages, evidence of ongoing hurdles in securing construction contracts.
🌆While some sectors, such as manufacturing and overall business confidence, have shown signs of stabilization and even optimism, the construction sector—particularly residential construction—remains pessimistic about orders.
🗽Munich's housing construction sector may mirror these national trends, with the city's order situation equally tough and the market conditions just as challenging.
- The employment policy in the housing construction sector might need revitalization, as companies are still struggling with insufficient work (51.2%), despite improvements in other industries and business confidence.
- The finance sector could play a significant role in alleviating the order situation in residential construction, given the hint of state guarantees for financing new apartments proposed by the newly appointed Federal Minister of Housing, Verena Hubertz.
