The German construction industry is projecting a further decline in residential construction due to rising costs, urging the government to intervene immediately. In an interview with the “Neue Osnabrücker Zeitung”, Olaf Demuth, president of the German Construction Industry Association, stated that the “financial debacle must be resolved to get out of the crisis.” He stressed that the state must have a vested interest in the process, arguing that a “financial turbo” is the only measure that could provide an instant boost to the sector.
While acknowledging the widely recognized issue of insufficient housing in metropolitan areas, Demuth noted that escalating energy prices have made construction so expensive that new builds often no longer offer a profitable return. Consequently, he firmly anticipates that the number of completed housing units this year will be significantly lower than last year, suggesting the figures are likely to fall below 200,000. This is a sharp contrast to 2025, when 206,000 units were completed.
Demuth believes that the crisis could be significantly eased within a few years if appropriate decisions are made. He argues that the government must support households, families, and investors by providing subsidized loans and guarantees, as the capital market is increasingly demanding higher collateral. “No one can get reasonable interest rates without a substantial portion of equity,” Demuth stated.
He elaborated that securing housing construction, valued at 50 to 60 billion euros, through favorable credit would be highly beneficial. He clarified that this refers not to routine consumer spending, as the funds are in the form of loans that would be returned, used as collateral, and thus generate a significant multiplier effect.
The association president expressed deep bewilderment regarding the lack of action by the Union and the SPD parties. “We have seen in Berlin how housing scarcity drives voters toward populists and determines election outcomes,” he noted. “I cannot comprehend, as a citizen or as the president of the construction industry, why the federal government is not addressing this issue. While we have little control over Trump, Putin, or China, we can absolutely influence whether more homes are built,” he emphasized, pointing out that the tools for such influence existed in previous decades.
According to Demuth, previously effective funding measures rapidly increased construction figures. “We have experience with this; it works. What is required now is political will,” he concluded. He added that if the economic engine of the construction sector were running optimally, it could contribute between nine and twelve percent to the overall economic output, representing an immense opportunity.
