The financial and economic crisis has had a particularly negative effect on the residential real-estate market. In addition to new construction, which is expected to weaken by about 20 percent this year, the construction sectors “renovation and modernisation” has also been affected by the crisis. Construction measures on existing housing units, however, are expected to decline by only about 3½ percent. Demand will remain weak into the year 2010. In 2011 at the earliest some recovery in the whole sector of residential construction will occur. This is one of the main results of the 67th Euroconstruct Conference, which was held in Warsaw.
Prices for new housing construction have fallen and unemployment has risen in most European countries; at the same time banks have become increasingly restrictive in their lending policies. This has been a major contributor to the clear decline in construction activity.
Spain and Ireland have been particularly hard hit by the plunge in housing construction, where construction far exceeded actual needs in the past boom phase. Market observers estimate that the number of unsold housing units in Spain amounts to about one million. As a result, the number of building permits has declined dramatically – from 915,000 in 2006 to about 250,000 in 2008.
In Germany the construction of new housing has been weak in recent years – despite the economic upturn, falling unemployment and moderate mortgage rates. In 2008 only about 152,000 new housing units were completed, the lowest figure since German Unification. “Nevertheless, the housing supply is good, on the whole, albeit with large regional differences”, explains Ludwig Dorffmeister, construction expert at the Munich Ifo Institute. A housing shortage, due to low levels of new construction and migration induced by employment prospects, is only a danger in a few regions. Other regions have vacancy rates of more than 10 percent.
Publication Erich Gluch and Ludwig Dorffmeister Europäischer Wohnungsbau im Sinkflug Ausgewählte Ergebnisse der Euroconstruct-Sommerkonferenz 2009 ifo Schnelldienst 14/2009, S. 35-44 (PDF, in German)
Phone: +49(0)89/9224-1218 Fax: +49(0)89/9224-1267
