Record-Breaking Material Shortages in German Construction
The shortage of materials on German construction sites has reached its highest level since 1991, finds an ifo Institute survey. “With Russia’s attack on Ukraine, supply problems for building materials have taken a drastic turn for the worse. Material prices continue to rise as a result of shortages and higher energy costs. Due to rising construction costs and higher interest rates, more orders are being canceled, especially in residential construction,” says ifo researcher Felix Leiss. In building construction, 56.6 percent of companies reported shortages in May, up from 54.2 percent the previous month. In civil engineering, the proportion was 44.8 percent. Of these companies, 91.1 percent reported that the war in Ukraine had exacerbated material shortages.
“At the moment, there is a particular shortage of structural steel, which is often imported from Russia or Ukraine. There are also problems with bitumen, and in some areas, companies complained about a shortage of bricks as well. Insulation materials were already in short supply in many places before the war began, but here, too, the situation has deteriorated further,” Leiss says.
Scarce materials and high energy costs are driving up prices, and construction companies are passing these increases on to developers. Most of the companies in building construction reported that they had recently revised their prices upward. A great many of them are planning further adjustments in the coming months as well. A large number of civil engineering companies also increased their prices, though not as many as in building construction. The combination of rising construction prices and higher interest rates for financing are now making some projects unprofitable: in May, 13.4 percent of building construction companies reported cancellations, up from 7.5 percent in April and 4.6 percent in March. In civil engineering the figure was 8.8 percent, down from 9.3 percent in April. Overall, however, order books are still full to bursting.
