The market for solid houses, i.e. houses built with brick on brick on the construction site, slumped by 10.7% in Germany and Austria last year. But that’s not all: the forecast for this year shows a further even stronger slump. The cause of the market slump is primarily due to higher construction and financing costs, as a new study by Interconnection Consulting shows.

Rising interest rates are pushing overall costs above affordability, causing sales in the solid housing industry to plummet dramatically. In Germany, average prices in the solid house market increased by about 11%. “Even more so, a wartime environment is a barrier to long-term loans,” said Johannes Lözelt, author of the study. Although the entire construction industry is affected by this situation, but it hits the solid house industry even harder. The reasons for this are longer construction times and higher costs in the planning and execution of solid house construction projects. This is leading to a decline in the solid house rate. Overall, the solid house quota in Germany was around 73% in 2022 and 65% in Austria. Two thirds of all solid houses are system houses, one third architect houses. The market volume in solid house construction in 2022 was around EUR 25 billion in Germany and EUR 3.9 billion in Austria.

Austria hit even harder

The overall market by house type is quite different in Austria and Germany. While in Austria the single-family house segment accounts for almost 75%, in Germany this segment only takes up just under 50%. Conversely, the share of terraced houses in solid construction is around 40% in Germany and only 12.3% in Austria. With regard to construction stages, a trend towards “turnkey” can be identified, which is at the expense of ready-to-build and ready-to-surface solid houses. Overall, a decline in volume of 19% is forecast for the solid house sector in Germany in 2023. In Austria, the forecast is even gloomier at -22.3%. From 2023 to 2026, Interconnection Consulting expects slight growth in volume for Germany (+0.9% p.a.) and a slight decline for Austria (-0.4% p.a.).

19/06/2023

Copyright: Interconnection, Publication free of charge for coverage regarding the study and InterConnection Consulting.