Gearing Up: Sentiment in Residential Building Gets a Boost - Industry Still Navigates Tough Terrain
Improved Living Conditions in Detached Homes - Persistent Challenges Maintain Complexity in Order Management - Persisting Challenges in Streamlining Housing Construction Supply: Ongoing Complexities in Procurement Processes
Heard the buzz? Sentiment in the realm of residential building is slowly but surely on the uptick - albeit at a modest pace, according to Klaus Wohlrabe, the man behind the helm of Ifo surveys. Companies are looking at the current scenario and future economic prospects with a rosier tint. But, jury's still out if the proposed government infrastructure package is already making ripples, says Wohlrabe. Companies, it seems, are pinning their hopes on a broader industry resurgence.
But make no mistakes, the order situation is far from smooth sailing. As per Ifo, a bit over half (51.2%) of the companies are still grappling with order scarcity, marginally less than in March (53.7%). At the same time, order cancellations have taken a hike. A whopping 10.4% of companies have reported canceled orders, marking a 2.6 percentage point increase compared to the previous month.
With the new Federal Minister of Housing, Verena Hubertz (SPD), slated to layout her program in the Bundestag this Thursday, it's been hinted that state guarantees for financing new apartments might be on the table[2]. And speaking of apartments, the announcement of a whopping 400,000 new homes per year was initially floated by the previous team of coalition partners, but it's conspicuously absent in the coalition agreement between CDU, CSU, and SPD[3].
- Tough times for residential builders
- Germany
- Munich
- Ifo Institute for Economic Research
- Residential building
- Klaus Wohlrabe
[1] While the current order situation in German residential building has somewhat improved, it remains a challenging landscape. In January 2025, Ifo reported a historical high of 57% of companies expressing a lack of orders. Since then, the situation has eased slightly, but it remains tense[1]. For a more detailed visualization, Dr. Klaus Wohlrabe, Head of Surveys at ifo, noted that even interest rate cuts by the ECB have barely made a dent in the difficulties faced by the residential building sector[1]. In order to gain a comprehensive understanding of Munich's residential building landscape, localized data would be required. As things stand, the general trend in Germany suggests a rocky ride for residential builders.
[2] In a Wednesday interview with "Zeit Online", the incoming Federal Minister of Housing, Verena Hubertz, mentioned the possibility of state guarantees to finance new apartments[4].
[3] The promise of building 400,000 new apartments per year, touted by the coalition government's predecessors, is notably absent from the coalition agreement between the CDU, CSU, and SPD[3].
[4] Keep an eye out for Verena Hubertz's program presentation in the Bundestag this Thursday evening, where the potential state guarantees for financing new apartments are likely to be discussed.
- The suggested state guarantees for financing new apartments might offer some relief to the residential building sector, presenting a potential boost for the industry.
- For the residential building industry in Germany, the current economic landscape continues to present challenges, with a significant number of companies still experiencing order scarcity and high cancellation rates.
