Decline in German Housing Construction Forecasted

German housing construction is predicted to decline significantly in the coming years. According to fresh forecasts from the Ifo Institute, housing completions in Europe's largest economy are expected to drop by 35% by 2026 compared to 2023. This decline is attributed to tight financing conditions and rising costs of building materials.

Reasons Behind the Decline

New residential construction in Germany is becoming increasingly challenging due to the sharp rise in building and financing costs. Ifo construction expert Ludwig Dorffmeister highlights the struggles faced by the industry. The decrease in the number of approvals for new constructions further adds to the concerns for the future.

Calls for Improvement

Dorffmeister urges policymakers to take action and enhance conditions for investing in new housing projects. Without intervention, the outlook for the construction sector in Germany looks bleak.

Construction Trends Across Europe

It's not just Germany facing a construction slump. In Europe as a whole, construction is expected to decline by 13% in 2026 compared to 2023, equating to 1.5 million fewer units. Specifically, Sweden, France, and Denmark are also projected to experience decreasing construction rates. However, there are more positive forecasts for Ireland and the U.K., where construction starts are expected to see growth of 14% and 12%, respectively.

These forecasts paint a challenging picture for the construction industry in Germany and throughout Europe. Stakeholders will need to collaborate and innovate to navigate these tough conditions.