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Construction in Germany below European Average

According to the state-owned KfW development bank, no less than 260,000 residential units will be completed in Germany this year. This would top the year-end total of 2014 – the highest in a decade – by another 2.5 percent. At first glance, the German construction business appears to be humming. However, a survey conducted by the Euroconstruct Economic Institute reveals a rather differentiated picture. The survey compared the construction activity per 1,000 residents of various European countries. The outcome: Construction activity in Germany is conspicuously lower than elsewhere in Europe.

Housing Construction in Germany Remains Sluggish

Euroconstruct's analysis shows that 2.6 new residential units for every 1,000 residents were built in Germany in 2014. This means that the country undercuts the European average, which equalled 2.8 residential units last year. The highest completion rates were reported from Norway, Finland, Austria and Switzerland. In some of these countries, more than five residential units per 1,000 residents were raised in 2014.

While the experts at Euroconstruct acknowledge that the German market has noticeably gathered momentum in recent years, they also identified adverse developments in the areas of development costs, land prices, and demographics. The survey authors therefore do not assume that the number of completions in Germany will cross the mark of 300,000 before 2017. Rather, they expect the completions rate between now and 2017 to level out at about 260,000 residential units per year. Compared to 2013, this would still be an increase by more than 30 percent.

Housing Construction in Europe Picking up Steam

Having still been in decline across Europe as recently as 2012 and 2013, investments rebounded in 2014 with an increase by nearly one percent. Euroconstruct expects investments to grow at an accelerating rate through 2017. Overall, the experts predict a cumulative growth by seven percent. That said, growth rates differ considerably from one country to the next. Countries which implemented harsh austerity measures after the economic crisis made a faster economic recovery than others, and are now experiencing an increasing demand for housing and a concomitant increase in building activity. In Ireland, for instance, the number of housing units completed is expected to more than double, rising from a ratio of 1.6 completions per 1,000 residents in 2014 to 3.4 units by 2017.