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In the long-term only moderate growth of construction demand in Germany

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Listed:
  • Erich Gluch
  • Ludwig Dorffmeister

Abstract

2007 and 2008 were good years on the whole for German construction. Especially commercial construction displayed respectable growth. In the medium and long term, the high growth rates of recent years (3 percent per annum on average) will not be matched, however. In future only moderate growth will be seen. According to calculations of the Ifo Institute average real growth in construction demand in the next ten years will be barely ½ percent p.a. This takes into account that construction output in 2009 will clearly shrink. The housing construction sector has been dominated for many years by building activity in already existing residential units. Taking into account the already very large housing stock (more than 39 million units), little change is expected here up to the end of the forecast period. According to the Ifo estimates only 160,000 units in single and two family houses will be completed in 2018 and approximately 115,000 units in apartment buildings. Although this would be 100,000 units more than in 2008, it would amount to 180,000 fewer than the annual average of 1993 to 2000. In total, residential construction will expand more rapidly than the two other construction sectors, largely because of continuingly high modernisation expenditures. In non-residential construction public-funded construction will be stimulated from the economic stimulus programmes to support overall demand considerably in 2009 and 2010 - while industrial demand will fall simultaneously. On a long-term basis there will be hardly any growth in both areas, however. This means that the volume of commercial construction in 2018 will be just above the level of 2008.

Suggested Citation

  • Erich Gluch & Ludwig Dorffmeister, 2009. "In the long-term only moderate growth of construction demand in Germany," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 62(07), pages 20-29, April.
  • Handle: RePEc:ces:ifosdt:v:62:y:2009:i:07:p:20-29
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    JEL classification:

    • L74 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Construction

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