Construction Sector Lags Amid Mixed Signals: Ifo's Take on Germany's Housing Market
Enhanced Optimism in Housing Sector - Residential Demand Remains Challenging - Navigating a Positive Atmosphere in Residential Building Projects - Remains Challenging with Unpredictable Supply Chain
Dive into the nitty-gritty of Germany's housing construction industry as Klaus Wohlrabe, head of Ifo surveys, shares some intriguing insights. Companies within the sector report positivity towards the current scenario and future prospects. However, Wohlrabe points out that the impact of the proposed infrastructure package remains hazy at the moment, with optimism focusing on overall sector growth [1].
Yet, the order situation screams caution. Over half of the companies (51.2%) continue to struggle with insufficient orders, a figure that peaked at 53.7% in March [1]. Meanwhile, cancellations are on the rise, with a 10.4% surge in cancelled orders reported - an increase of 2.6 percentage points from the prior month [1].
Come Thursday evening, the new Federal Minister of Housing, Verena Hubertz (SPD), will deliver her program in the Bundestag [2]. In a 'Zeit Online' interview, she hinted at state guarantees for financing new apartments [2].
The goal of building 400,000 new apartments per year, pledged by the coalition's predecessors, isn't explicitly mentioned in the CDU, CSU, and SPD's coalition agreement [3].
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Keywords: Housing Construction, Ifo Institute, Order Situation, Germany, Munich, Klaus Wohlrabe, Business Climate Index
[1] The global economic landscape is currently grappling with a multitude of crises, and the residential construction sector is no exception. According to Ifo data, the crisis in residential construction has become the norm. In January 2025, a record high of 57% of companies reported a lack of orders. Although the figure has eased slightly, it remains a cause for concern.
[2] In a bid to address the housing crisis, the new Federal Minister of Housing, Verena Hubertz, will unveil state guarantees for funding new apartments, as she presents her program in the Bundestag. The exact details of the strategy are yet to be revealed.
[3] Notably, the coalition agreement between CDU, CSU, and SPD does not explicitly mention the promise made by the coalition's predecessors to build 400,000 new apartments yearly. Whether this commitment will be reaffirmed in the new government's agenda remains uncertain.
- Given the ongoing struggles in the housing construction sector, the proposed state guarantees for financing new apartments by the new Federal Minister of Housing, Verena Hubertz, could potentially ease the order situation and boost employment in the industry, as per the discussions in the business and community policy.
- Despite the optimism around overall sector growth, as pointed out by Klaus Wohlrabe of Ifo, the employment policies within the housing construction industry remain critically important, considering the persistent lack of orders and rising cancellations, which indicate a significant need for policies that stimulate demand and sustainable growth.
