More and More Cancellations in German Residential Construction
The wave of cancellations in German residential construction is surging higher. In September, 16.7 percent of the businesses surveyed were affected, up from 11.6 percent in the previous month. This is a finding of surveys conducted by the ifo Institute. “What with skyrocketing material and energy prices, as well as the rise in financing interest rates, planning certainty is gone and construction costs continue to climb. For some developers, the overall situation is no longer tenable, and they are shelving projects or even pulling the plug entirely,” says ifo researcher Felix Leiss.
Business expectations clouded over once again: the indicator fell to minus 53.2 points, which is exceptionally low. “On average, companies still have large order backlogs, but concerns about the future have rarely been so acute. Expectations are at their lowest level since the survey began in 1991,” Leiss adds. Furthermore, there were many problems with construction materials, with 32.7 percent of companies reporting shortages. In the previous month, the share had been 36.4 percent. “Material shortages are easing only slowly, and high energy prices are making scarce materials even more expensive. Construction companies have to pass the higher procurement costs on to customers. Further price increases are planned across the sector for the coming months,” Leiss says. The price planning indicator rose from 48.4 to 49.5 points.
