German Residential Construction To Slump 35% By 2026

(RTTNews) - Germany as well as Europe as a whole are set to see a massive decline in residential construction in the coming years due to rising costs, the think tank ifo institute said Tuesday, citing the latest projections by the Euroconstruct forecasting network. Only about 1.5 million housing units are forecast to be built in Europe by 2026, which is a 13 percent decline on 2023, the ifo institute said. This translates to an expected decline of 35 percent in Germany. "Due in particular to the sharp rise in construction and financing costs, it's often no longer possible to build new homes in Germany," ifo construction expert Ludwig Dorffmeister said.

The lack of policy decisions is also impacting residential construction, the expert said.

"The resulting decline in the number of permits doesn't bode well for the coming years," Dorffmeister added.

Among the 19 countries covered by the Euroconstruct, Sweden is projected to witness a 47 percent slump in the number of completions between now and 2026. France and Denmark are forecast to see declines of 22 percent and 19 percent, respectively. "Construction experts report in particular that private households must contend with higher borrowing costs and reduced financial leeway," Dorffmeister added.

Meanwhile, Ireland, Slovakia, and the UK are projected to log double-digit gains during the period.

Europe is set to witness a 6.4 percent fall in investment in new residential buildings by 2026. Spending on maintenance and home renovations is expected to drop just 1.2 percent.

That said, Europe's civil engineering is projected to grow 7.5 percent by 2026 amid the expected above-average momentum in the energy and rail segments as well as in the water management segment.