Construction prices are rising – but at least at a slower pace

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Carpenter on a roof truss: Building and renovating remains costly

Photo: Jochen Tack / picture alliance / Jochen Tack

If you want to build or renovate, you still have to be prepared for rising costs. After all, construction prices are now rising somewhat more slowly, as the Federal Statistical Office announced.

According to the report, prices for the construction of new conventionally manufactured residential buildings rose by 8.8 percent in May compared to the same month last year. In the previous reporting month of February, an increase of 15.1 percent had been recorded within one year. Compared with February, prices rose by 0.8 percent in May.

Shell construction work on residential buildings cost 5.4 percent more in May than a year earlier. The price of concrete work rose by 2.8 percent. In the case of masonry work, prices rose by 7.4 percent.

Timber construction work became cheaper

They increased by 10.8 percent for roofing and waterproofing work, and by 9.4 percent for earthworks. Prices for finishing work rose by 11.7 per cent, those for heating and central water heating systems by 14.9 per cent.

After all, carpentry and timber construction work, on the other hand, fell by 2.7 percent.

New construction prices for office buildings also rose in May, by 9.0 percent compared to the same month last year. The increase was 8.0 percent for commercial buildings and 10.5 percent for road construction. Maintenance work on residential buildings (excluding cosmetic repairs) cost 11.7 percent more than in May 2022. All figures refer to construction work on the building including VAT.

One reason for the increased costs is that building materials have become much more expensive in some cases.

The Ifo Institute also expects a sharp decline in residential construction due to a sharp rise in costs. This year, only around 245,000 apartments are likely to be completed in new buildings and in 2024 only 210,000, the Munich researchers predict. In 2025, together with the other completions, it is likely to be only about 200,000 residential units. That would be only half as much as the target set by the federal government.

"The most important reason for the decline is the significant increase in the cost of financing and construction services," said Ifo construction expert Ludwig Dorffmeister. "At the same time, the federal government has drastically reduced new construction subsidies and once again tightened the standards for new construction at the beginning of 2023."

mmq/Reuters/dpa