Forecast 2024: Dark clouds over housing construction - financial experts warn of a continued decline in the construction industry

Forecast 2024: Dark clouds over housing construction - financial experts warn of a continued decline in the construction industry

According to a report from www.capital.de, the decline in the construction industry will continue in 2024. The business climate in residential construction has fallen to its lowest level since 1991 and rental prices continue to rise. According to the Ifo Institute, there is still a bad mood and gloomy forecasts for housing construction. The business climate barometer has fallen to its lowest level since the survey began and dissatisfaction with the current situation is increasing.

The study by the German Institute for Economic Research (DIW) confirms that spending on construction services will fall this year for the first time since the 2009 financial crisis. Housing construction will even shrink by 5.4 percent. The construction industry is experiencing a prolonged slump and a small increase is only expected next year. The goal of building 400,000 new apartments annually is unlikely to be achieved, as only around 265,000 apartments are expected to be built in 2024.

According to the Ifo survey, more companies had to accept the cancellation of orders for residential construction in December, and 56.9 percent of companies spoke of order backlogs being too low. Politicians must create clarity about funding programs in order to stimulate the construction industry. The uncertainty among potential builders is high and it will probably take some time before the construction industry recovers.

Construction prices are rising more slowly, which could provide some impetus for new construction. However, there is no relief in sight on the rental housing market as asking rents continue to rise. Prices remain high, particularly in large German cities, and demand for rental apartments remains at a high level.

Overall, the facts indicate that the construction industry will remain in difficult waters in 2024. Politicians and the industry must work together to eliminate uncertainty and stimulate the construction industry. It is expected that the situation will only improve slightly next year.