There is no sign of a turnaround in the ailing housing construction sector, on the contrary: the number of building permits fell in April by 17.0 percent or 3,600 compared to the same month last year to 17,600, as the Federal Statistical Office announced on Tuesday. From January to April, 71,100 apartments were approved. That was 21.0 percent or 18,900 fewer than a year earlier. Expensive materials and increased financing costs continue to deter many potential home builders and investors.
The decline in building permits was most pronounced for single-family homes in the first four months of the year, falling by 32.5 percent to 12,300. For two-family homes, a drop of 18.3 percent to 4,400 was reported. The number of permits for multi-family homes – the most numerous type of building – also fell significantly: Here, the number fell by 20.2 percent to 38,500.
In the residential construction sector, the business climate brightened in May despite the ongoing lack of orders. The corresponding barometer rose from minus 52.3 in April to minus 46.4 points, as the Munich-based Ifo Institute found in its company survey. Both expectations for the coming months and assessments of the current business situation improved, albeit at a very low level.
“The housing builders hope that they have left the trough behind them,” said the head of the Ifo surveys, Klaus Wohlrabe. “But the road to recovery is still long.” A key problem remains the widespread lack of orders: In May, 51.7 percent of companies reported this, compared to 55 percent in April.
Despite a decline, there is still no all-clear when it comes to cancellations: In May, 15.1 percent of companies reported canceled projects, compared to 17.6 percent in the previous month. “Many companies are trying to counteract the lack of orders by reducing prices,” said Wohlrabe.
