Housing market sentiment worsened in March. The corresponding Ifo business climate index dropped from -17.7 to -19.5 points, reflecting markedly more pessimistic expectations regarding the future. However, the assessment of the current situation improved slightly. According to Klaus Wohlrabe, head of the Ifo surveys, the primary concern weighing on housing expectations is the prospect of rising interest rates. He noted that higher financing costs are likely to curb the building ambitions of many households.
On the operational side, however, some positive indicators are emerging. The order environment is slowly improving. The percentage of companies reporting too few orders significantly decreased to 43.4 percent, marking the lowest figure since July 2023. This improvement is attributed to a recent rise in building permits, and cancellations have also fallen to 10.8 percent recently. While Wohlrabe stated that the order situation is slowly improving, he cautioned that uncertainty remains high.
