CANCELLED ORDERS AND LACK OF NEW BUSINESS HITTING HOUSING INDUSTRY HARD

More and more housing companies are reporting canceled orders. 16 percent of companies are currently reporting canceled orders, after 14.3 percent in February and 13.6 percent in January. This is from a survey by ifo Instituts out. According to Ifo expert Felix Leiss, the situation in residential construction is getting worse and worse. “As a result of the rapidly increasing construction costs and the higher financing interest, many residential construction projects are no longer profitable, are being postponed or canceled altogether. New business is literally collapsing and the worries about the future in the industry are great,” says Leiss.

Currently, 25.5 percent of the companies are already reporting a lack of orders, after 23.4 percent in February. A year ago, in March 2022, the proportion was only 8.6 percent. Many companies still have well-filled order books, which would still mitigate the effect on construction activity. The backlog of orders will not be able to fill the growing gap in new orders forever. The crisis seems inevitable for many companies.

There are several reasons for the uncertainty in the industry, says Felix Pakleppa, General Manager of the Central Association of the German Construction Industry (ZDB). “We have significant material price increases due to Corona and the war. Interest rates have tripled. Added to this is the high inflation.” This would primarily affect the construction of single-family houses and rental apartments, but also commercial real estate and infrastructure projects such as roads and sewage systems in cities and communities.