Shining a Light on Residential Construction: A Twist of Bright Spots Amid the Tumult
- Improving Mood in Housing Construction: Current Order Situation Remains Challenging
Hey there! Let's chat about the vibe in the housing construction sector. Klaus Wohlrabe, the big cheese at Ifo surveys, shared some interesting insights. He said, "Things are looking a bit brighter - minimally so, mind you," in the housing construction world. Companies seem more optimistic about both the current situation and the future economic outlook. However, it's unclear if the government's infrastructure plan is causing this optimism yet.
A dark cloud still looms over the order situation. According to Ifo's findings, around 51.2% of companies are dealing with orders that just won't come, and that's slightly worse than March at 53.7%. Oh, and cancellations are up too. Now we're looking at 10.4% of companies dealing with cancelled orders - ugh, that's a 2.6 percentage point increase from the previous month.
On Thursday evening, Germany's new Housing Minister, Verena Hubertz (SPD), is set to present her program in the Bundestag. She's already talked about state guarantees for new apartment financing. You might remember that the predecessors of the traffic light government promised to build 400,000 new apartments annually, but that figure is nowhere to be found in the coalition agreement between the CDU, CSU, and SPD.
- Order situation
- Residential Construction
- Germany
- Ifo Institute for Economic Research
- Klaus Wohlrabe
- Munich
Deeper Dive:
While there's some optimism floating around, the situation remains grim, with a persistent lack of orders. In January 2025, a whopping 57% of residential construction companies reported a lack of orders, which is the worst on record according to the Ifo Institute[1]. This trend has been persistent, with 53.6% of companies reporting similar issues in December 2024[2].
Though there's a slight improvement in recent months[1], the crisis in residential construction seems to be the new normal. Even interest rate cuts have failed to significantly improve the situation[1]. For cities like Munich, Ifo's data doesn't provide detailed regional info, but it seems to be part of the larger national trend. Various economic conditions in Germany, including policies and global trade tensions, affect the construction sector nationwide[3].
All in all, the order situation in residential construction across Germany, including Munich, is still pretty dire, though there's been a slight easing in recent months.
- As the order situation in residential construction remains persistently grim, it would be beneficial for the new Housing Minister, Verena Hubertz, to focus on employment policies within the industry to attract and retain workers, providing a boost to the sector.
- Considering the slight improvement in the order situation, it's crucial for the community to address financing policies and collaborate with the finance sector to ensure the availability of funds for construction projects, thereby promoting business growth in the residential industry.
