Ifo Institute: The mood in German housing construction is worse than ever

Ifo Institute: The mood in German housing construction is worse than ever

The mood among housing construction companies in Germany fell to a historic low at the beginning of the year. This is shown by a survey conducted by the Institute for Economic Research (Ifo) for the so-called Ifo business climate index. The companies are asked about their current economic situation and their expectations for future business. The index fell from minus 56.9 to minus 59.0 points in January – the lowest value ever measured.

The companies surveyed do not see any rapid improvement, because the prospects for the coming months are assessed to be worse than ever before: the barometer for expectations fell from minus 64.7 to minus 68.9 points.

“The outlook for the coming months is bleak,” said the head of the Ifo surveys, Klaus Wohlrabe. “Housing construction continues to be exposed to a double burden.” While on the one hand there were no new orders, on the other hand projects continued to be canceled.

“A lack of orders is putting a strain on the business of residential builders,” said Wohlrabe. In January, 52.5 percent of companies complained about a lack of orders, compared to 56.9 percent in December. There was also a slight decline in cancellations: 17.4 percent were affected, after 22.1 percent at the end of 2023. However, according to the Ifo Institute, this is no reason for optimism. “We cannot yet speak of a turnaround in housing construction. The difficult conditions have hardly changed,” said Wohlrabe. “High interest rates and construction costs don’t make things any easier for builders.”

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