Residential construction momentum in the DACH region declines sharply

High interest rates and the increased need for equity in mortgage loans, caused demand for loans to fall dramatically. This is compounded by massive increases in construction costs, which far outpace core inflation. Building permits fell 13.1% in 2022. Construction completions in the DACH region will therefore also plummet by a double-digit percentage amount in 2023 (-11.5%), as a study by Interconnection Consulting shows.

Within the DACH region (Germany, Austria, Switzerland), the number of housing completions in Austria is higher in relation to the number of inhabitants than in the other two countries. While three apartments were built per 1000 inhabitants in Germany in 2022, the figure in Austria was 6.7. In Switzerland, 5.5 apartments were built per 1000 inhabitants. For this year, residential construction in Austria will also show a higher dynamic than in Switzerland and Germany, but at a lower level. In Austria, the decline will be particularly sharp at 15.5%. Whereas around 60,000 homes were completed last year, the number will fall to around 50,000 this year. A similar reduction in construction momentum is also evident in Germany. In Switzerland, the decline is still a moderate 5.2%. The number of completed apartments per 1,000 inhabitants is down to 5.6 in Austria, 2.7 in Germany and 5.2 in Switzerland.

Construction momentum for single-family homes plummets

Overall, there is a trend toward multi-story residential construction (MGWB) in the DACH region. This development is being further fueled in particular by the sharp rise in mortgage lending rates, explains Ernst Rumpeltes, author of the study. “Especially the construction of single-family homes is collapsing sharply.” In 2018, the ratio of MGWB to single- and two-family homes was 65 to 35. In 2023, nearly 71% of all housing units will be completed in multi-story housing. This proportion should not change much in the next few years.

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

Ernst Rumpeltes

> Learn more about Ernst Rumpeltes

Ernst Rumpeltes, Senior Consultant, has been responsible for the preparation of studies and consulting projects at Interconnection Consutling since 2010. He is an expert in market intelligence, brand image analysis and customer behavior. Ernst Rumpeltes studied Business Administration at the Vienna University of Economics and Business.

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