More Cancellations in German Residential Construction
Cancellations in residential construction have continued to rise, finds an ifo Institute survey, with 16 percent of companies reporting canceled orders. That represents an increase from 14.3 percent in February and 13.6 percent in January. “The situation in residential construction continues to deteriorate. Due to the rapid rise in construction costs and higher financing interest rates, many housing projects are no longer profitable, have been postponed, or are being canceled altogether. New business is literally collapsing and the industry has grave concerns about its future,” says ifo researcher Felix Leiss.
Business expectations stand at minus 56 points. Although this is an improvement on February, which saw an extraordinarily weak minus 64.5 points, there are still fears of business losses across the board. “Many companies still have well-filled order books, which is currently cushioning the effect on construction activity. However, the order backlog will not be able to bridge the growing gap in new orders forever. Crisis seems inevitable for many companies,” Leiss says. Last month, 25.5 percent of companies reported a lack of orders, up from 23.4 percent in February. A year ago, in March 2022, the share was only 8.6 percent.
