DIW experts expect construction prices to continue to rise
Status: 12.01.2022 10:30 a.m.
The recent sharp rise in construction prices will continue this year according to a forecast by the German Institute for Economic Research (DIW). Material bottlenecks, for example in the case of wood, are overshadowing the planned housing construction offensive.
Building in Germany is getting more and more expensive. According to an assessment by the German Institute for Economic Research (DIW), the ongoing shortage of materials is likely to cause building prices to rise again this year, after residential construction had already risen in the double-digit range in 2021.
The bottlenecks in wood and other raw materials affect both private house builders and the large construction companies who are to build 400,000 apartments annually on behalf of the federal government. Nevertheless, the construction industry should do good business for the foreseeable future. “Contrary to the general economic trend, the construction industry is still successfully fighting the Corona crisis,” said DIW expert Martin Gornig. “Sales should continue to rise in the coming years.”
According to the DIW, new residential construction in particular is likely to continue to flourish this year and next in view of sustained demand and low interest rates. The same applies to investments in public infrastructure and the energetic renovation of public and private buildings. In commercial construction, catch-up investments are expected after two weak pandemic years. Growth prospects are also seen in civil engineering, primarily thanks to planned record investments by Deutsche Bahn and the federal government.
Strongest increase in wholesale prices since 1974
The great demand for raw materials and intermediate products has also pushed up wholesale prices. In the past year they have risen faster than they have been in almost 50 years. According to the Federal Statistical Office, there was a higher increase than the annual average of 9.8 percent within a year, last year during the first oil crisis in 1974 with a plus of 12.9 percent.
In wholesale, prices for petroleum products (plus 32 percent) as well as ores and metals (plus 44.3 percent) rose sharply compared to the previous year. There is also a basic effect: In the crisis year 2020, the price level for many raw materials was comparatively low, so that the difference is now even more significant. From November to December 2021, wholesale sales prices rose by just 0.2 percent, according to the Wiesbaden authority. However, they were 16.1 percent above the December 2020 level.