Germany

Overall construction activity

The first published figures for 2019 by the Stats Office show once more a substantial growth in total construction investment in real terms of 3.8% compared to 2.5% in 2018. The new all-time high of the volume of gross-fixed capital formation construction was €373 billion. The growth was fuelled both by building construction and civil engineering works with a rate of 2.5% each. As in previous years, non-residential building (+1.3%) grew at a lower rate. The surplus in overall employment in the construction sector lagged behind with a growth of 1.4%, due to rising productivity and the lack of skilled construction workers. In 2019, new orders for the construction industry had a value of €86.5 billion (+ 9%), the highest volume since reunification in 1991. The volume of permits for new buildings (excluding civil engineering) was close to €95 billion (+ 6%).

Housebuilding

The biggest subsector (61% of total construction investment) showed a remarkable development since it reached its lowest point in 2009. Until 2019, investment in real terms grew by 36 %, the number of flats and houses new on the market doubled to about 300,000 units. The most important reasons for this development were the high number of immigrants (more than 3 million in the past 10 years), ongoing very low mortgage rates, extremely high demand for new flats in urban areas, rising disposable incomes of private households and the search for investments with higher yields than the capital market has to offer. Between 2010 and 2019 investment into new houses doubled in real terms. Nevertheless, in 2019, the subsector stood for just one third of total investment in the residential sector. House building is still being dominated by rehabilitation and maintenance works, although the growth rate since 2010 was far less impressive, at only 15%. Political decisions concerning the housebuilding sector focus on two issues. First, to bring the number of new flats and houses to a level of 375,000 units per year. To reach this goal, the federal Government enacted several subsidies in autumn 2018. Second, the Government wants to reduce CO2 emissions from the building sector. Since the implementation of the subsidy programme in 2006, the state-owned KfW-Bank has pumped about 57 billion Euros into the market for investment into the existing housing stock (especially better insulation and modern heating systems). On the other hand, the regulations for energy saving building methods in new construction have been tightened constantly. The last legislative step in 2016 increased investment costs by nearly 10%.