Residential construction in Germany continues to contract

The statistical figures, which were available shortly before the editorial deadline, indicate that the construction sector will continue to be gloomy in the future. According to the Federal Statistical Office, the number of residential building permits fell again in May. In March 2024, the construction of 18,500 homes was approved in Germany, around 6,000 or 24.6% fewer than in the same month last year. Compared to March 2022, the number of building permits even fell by 46.9% or 16,300 apartments, as the Federal Office points out. There was a similar decline in the first quarter as a whole. In the first three months of 2024, 53,300 residential construction projects were approved. This is around 22.2 percent or 15,200 fewer homes than in the first quarter of 2023.

Number of approved single-family homes down by a third

The number of approvals for single-family homes fell particularly sharply. Compared to the same quarter of the previous year, the number of building permits for single-family homes fell by 35.6% or 5,100 to 9,200. For two-family houses, the number of approved apartments fell by 20.0% or 800 to 3,200. The number of approved apartments for the largest building type in terms of numbers, multi-family houses, also fell significantly by 22.9% or 8,500 to 28,700 apartments.

Residential building permits fell by around a quarter in 2023.

This continues a trend that already characterized the previous year. According to the Federal Statistical Office, 260,200 apartments were approved in 2023 as a whole. This is 26.6 percent or 94,100 fewer homes than in 2022, the lowest level since 2012.

The decline in residential construction projects by private individuals is particularly marked. The number of approvals granted to this group fell by 42.2% or 59,400 apartments compared to the previous year. This is reflected in the types of buildings preferred by private individuals. In 2023, the number of building permits for single-family homes (-39.1 % or -30,500 to 47,600) and two-family homes (-48.3 % or -13,400 to 14,300 apartments) fell particularly sharply. Around two thirds of new apartments in Germany are being built in apartment buildings, most of which are being built by companies. Here, the number of building permits fell by 25.1% or 47,800 to 142,600 apartments.

Lack of orders in the residential construction industry

Residential construction companies report a similarly gloomy picture. According to the ifo Institute in May, more than every second company (55.2%) reported a lack of orders in April. In March, the figure was 56.2 percent. "Housebuilders are looking for signs of hope," says Klaus Wohlrabe, head of ifo surveys. "However, there is no end to the crisis in sight."

The large number of cancellations also remains a major problem. In April, 17.6 percent of companies reported canceled projects, compared to 19.6 percent in March. Although the business climate in residential construction rose significantly, it remains deep in negative territory. Expectations are far from optimistic. "Due to a lack of orders, many companies are reducing their prices," says Wohlrabe.

In civil engineering, 22 percent reported a lack of orders. Companies there are also much more satisfied with current business. "The outlook for the coming months is characterized by scepticism in civil engineering, but not as much as in building construction," says Wohlrabe.