Skyrocketing construction costs, rising financing interest rates and limited funding options are leading to a continued high number of cancellations in residential construction. In August, 11.6 percent of the companies surveyed by the Ifo were affected, as the Munich institute announced on Monday. In July, the proportion was 11.5 percent.
“Since April we have seen that a striking number of projects are being canceled,” explained Ifo researcher Felix Leiss. The framework conditions for housing construction have deteriorated “massively” in recent months.
According to the Ifo survey, many companies in the industry fear a downturn in business. The expectation indicator determined by the institute fell to minus 48.3 points and thus the lowest level since the survey began in 1991. The previous low was reached in April with minus 47.4 points.
Furthermore, material is scarce in many places and therefore expensive, as Leiss went on to explain. In August, 36.4 percent of companies reported delivery problems. But that was less than in July with 45.6 percent. The high energy prices make the building material, which is often energy-intensive to produce, even more expensive, explained Ifo researcher Leiss. Many construction companies are therefore planning further price increases.
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