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Ten-year record for increase: construction prices rising at a rapid pace

Especially in major German cities, the housing shortage is rampant, while at the same time building is becoming more and more expensive. In comparison to the previous year, the prices for new residential buildings are rising by more than four percent – and thus more than in ten years.

Builders have to reach deeper into their pockets. According to the Federal Statistical Office, construction prices for residential buildings climbed by 4.1 percent in May compared to the previous year. This is the strongest increase in more than ten years, said the Wiesbaden authority. The data refer to conventionally manufactured residential buildings. Prefabricated houses are not among them.

Housing construction prices had risen sharply during the previous survey in February, rising by 4.0 percent compared to the same month last year. From February to May 2018, construction prices increased by 1.0 percent according to the statistics.

In May, construction work on residential buildings was significantly more expensive than in the previous year. Here, prices rose by 4.6 percent. Prices for maintenance work – excluding cosmetic repairs – increased by 3.8 percent compared to the previous year. Driven by the low interest rates, the demand for real estate is increasing and filling the order books of the construction industry.

The prices for finishing work increased within one year by 3.6 percent. The new building prices for office buildings and commercial buildings increased by 4.1 percent each. In road construction, prices increased by 5.6 percent year-on-year. The Federal Statistical Office publishes the data on the development of construction prices every three months.

The strong increase also means that fewer and fewer Germans want to create their own home ownership. Four out of five Germans are unlikely to buy or buy housing in the next five years, according to a representative survey for the Central Real Estate Committee in June. According to this, the background is, in part, the sharp increase in purchase and construction prices in major cities and metropolitan areas.

Source: https://www.n-tv.de/wirtschaft/Baupreise-steigen-in-rasantem-Tempo-article20520268.html