Building President Hübner: “Things are looking dramatic in residential construction”

Mr. Hübner, the farmers are blocking highways and they are already getting concessions from politicians. The construction industry achieved nothing at its construction summit with the Chancellor. Are you taking to the streets now?

No, we won't do that. We point out grievances and negotiate. But it's the traffic light's own fault. With her back and forth she actually challenged the protest.

Let's stick to construction. What is the current state of affairs?

We got away with a black eye in commercial construction and public construction, where sales fell slightly. However, things look dramatic in residential construction. Sales have literally collapsed by 12 percent. The companies there have a real problem.

Is improvement in sight?

No. We assume that sales in residential construction will also fall by a further 12 percent in 2024. Public and commercial construction will probably grow slightly again, but the bottom line is that the construction industry will record a further decline in sales of 3.5 percent. However, 2024 will be particularly challenging, as more than half of our member companies expect their earnings situation to deteriorate. In 2022 and 2023 we were still in the black in nominal terms, i.e. in current daily prices.

So the federal government's goal of 400,000 new apartments per year will be missed again?

That was unrealistic from the start, everyone in the building knew that. We estimate that around 270,000 apartments were completed in 2023; this year the number is likely to fall further to just over 200,000. In addition, there are more and more public financing problems with large infrastructure projects, especially when it comes to renovating railway lines.

Are you worried about a wave of bankruptcies?

No, but the number of bankruptcies among smaller craft businesses will increase this year and next, we can't fool ourselves. In addition, many medium-sized companies are undergoing a generational change. Some will say, I won't do that to my descendants anymore and conclude.

But there is a shortage of skilled workers anyway…

Yes, it reduces the consequences for the labor market. Nevertheless, this year we will reduce employment in construction for the first time since 2008.

Will building become cheaper again this year?

Probably yes. The institutes assume minus one percent. The extreme fluctuations in material prices caused by the Ukraine war are over, but energy is still expensive and weak demand is now also taking a toll, all to the detriment of companies. But prices alone will not turn the market around. We urgently need an end to the funding chaos.

What exactly was supposed to happen?

I'm from the industry, but I couldn't tell you which funding pots are currently open or when they will be open again. Probably even few people in politics know this. Programs are launched and sometimes closed again just weeks later because the money is empty. Like throwing sugar, it doesn't attract investors. A building permit takes at least six months and then you are suddenly faced with a different funding backdrop. There needs to be long-term reliability and trust in the market and government programs. The traffic lights haven't been able to do that yet.