The housing construction sector experienced a renewed downturn in sentiment during August, according to data released Friday by the Ifo Institute. The Ifo Business Climate Index for housing construction decreased from -24.2 to -26.3 points, signaling a reversal of the cautious optimism seen in recent months.
Both expectations for future business and assessments of the current situation worsened. Klaus Wohlrabe, head of Ifo surveys, commented that the previous modest improvement in sentiment has paused. He emphasized that it will take time for the rise in building permits to translate into a stronger order backlog for companies.
While the proportion of firms reporting a lack of orders decreased slightly, from 46.1% to 45.7%, the overall level remains high. Simultaneously, the cancellation rate increased from 8.2% to 8.5%, indicating persistent challenges.
“Companies continue to grapple with weak demand” Wohlrabe stated. “The impact of planned policy interventions has been limited thus far. Further adjustments in mortgage lending are still needed. The industry must remain patient”.
