For a long time, construction prices have only known the upward direction. In addition to rising interest rates, the incalculable building material prices have some potential to stifle construction activity.

In view of the sharp rise in construction prices, the industry is concerned about new orders. “We fear that new residential construction projects will be postponed for the time being due to the increased construction costs and rising interest rates,” said Tim Oliver Müller, general manager of the Main Association of the German Construction Industry, on Friday.

In private construction projects, the higher energy and living costs could also call into question the budget of dreaming of your own home.

The Federal Statistical Office had previously reported that prices on German construction sites had risen more than they had in more than 50 years. In May of this year, 17.6 percent more had to be paid for construction work than a year earlier. That was the highest increase since May 1970, when prices rose 18.9 percent for the year. In the previous reporting month of February 2022, the increase was 14.3 percent.

Exploding material prices

Reasons are scarce and expensive materials as well as high demand. The price increase was particularly strong for metal construction work (23.6 percent) and concrete work (23 percent). Below-average increases were recorded in earthwork (14.8 percent) and masonry work (12.8 percent).

The increases are the result of skyrocketing material prices, explained Müller. Since suppliers hardly ever make any price commitments, the construction companies cannot calculate their offers reliably. You should agree clauses on sliding fabric prices with customers. It is also all the more important to reduce costs elsewhere, for example by standardizing the state building codes.

The central association of the construction industry called for a national raw materials and energy strategy for building materials and various materials. “We can no longer be dependent on imports,” said CEO Felix Pakleppa. “A national construction and raw materials summit would be an important first step.”