Reserved outlook for residential construction

Ifo's most recent construction forecast for Germany observes that new residential construction has overcome its cyclical low point. However, the completion numbers in future - apart from cyclical spikes - will remain moderate and hardly enlarge the stock of existing dwellings. With reduced subsidies, a declining population in the medium term, a growing portion of senior citizens and an increasing wealth and income gap as well as an increased reluctance of many people to take on long-term financial obligations, the stimuli for new residential construction have become weaker. A stimulus that remains is the changing living standards of an ageing society and the growing regional differentiation in economic and demographic development: migration for reasons of employment or retirement will lead to increased housing demand in attractive regions. Up to 2016 there will be dampened growth in new residential construction, particularly in the economically strong centres of Baden-Wuerttemberg and Bavaria as well as in some centres of eastern Germany. Up to the year 2016, an annual average of 290,000 residential units will be completed: the difference to the 2006 completion number in western Germany will be +14%, which is much less than in eastern Germany. Here, however, the level of new housing completions in 2006 was very low at only 33,000 units.