Double-Digit Decline in German Housing Construction

In Germany, housing completions fell by 2.2% last year. In 2023, Interconnection Consulting forecasts a crash in housing completions of 11.8% due to the decline in building permits, rising interest rates, high inflation and declines in real wages. Only in the smaller federal states of Thuringia and Saarland will more flats be completed in 2023 than the year before.

Overall, the number of completed dwellings in 2022 was 160,455, according to Interconnection’s regional study, which analyses housing construction at the district level. In 2023, this number will drop to around 145,000. Larger cities in particular are affected by the sharp decline. Berlin, Munich and Hamburg will all lose around 15%. Düsseldorf (21.2%) and Karlsruhe (25.9%) will even have to accept declines of more than one-fifth of the housing construction volume next year. The federal states with the highest housing construction volume, such as Bavaria, North Rhine-Westphalia and Baden-Wuerttemberg, will plunge between 11% in North Rhine-Westphalia and 15% in Baden-Wuerttemberg next year. In all other federal states, too, the decline will mostly be around 10%. Only in the smaller federal states with a lower volume of housing construction, such as Thuringia and Saarland, can expect growth of 4.2% and 2.9% respectively in 2023. But there is still strong growth in isolated cases despite the economic slump in construction. In Osnabrück, an increase in housing completions of over 66% is expected. Similar growth is also forecast for the district town of Saalfeld-Rudolstadt.

Prefabricated Houses on the Rise

One- and two-family houses are even more dramatically affected by the decline than multi-storey housing. In 2022, the decline in single- and two-family house construction was already 8.2%, and in 2023 this will increase significantly to a minus of 16.4%. The decline is greatest in Thuringia at 38%. In the most important federal states in terms of volume, Bavaria (-17.6%), North Rhine-Westphalia (-16.5%) and Baden-Württemberg (-16.7%), the decline is also above the average for the nationwide decline. Multi-storey housing could still record a slight increase of 1.5% in 2022. In 2023 the decline will amount to 9.2%. This is mainly caused by the decline in construction volume in the major cities, which has already occurred before. Overall, it can be seen that the prefabricated house rate is increasing. In Baden-Württemberg, the rate will reach 50% next year. In Rhineland-Palatinate and Saarland the prefabricated house quota also reaches over 40%. In Bavaria, every third new house is a prefabricated house.


Copyright: Interconnection, Publication free of charge for coverage regarding the study and InterConnection Consulting.

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