Key insights
- German residential construction fell to a 13-year low due to high costs and interest rates. While German construction permits are rising, the overall trend suggests continued weakness in the sector. This could negatively impact European economic growth, indirectly affecting US equities through global economic linkages.
BERLIN, May 22 (Reuters) - Residential construction in Germany dropped to a 13-year low in 2025, hurt by higher building costs and interest rates, putting pressure on the government to step up deregulation and support construction efforts.
The number of residential units completed last year in houses, apartment blocks or other buildings dropped by 18% to 206,600, the national statistics office said on Friday, the lowest level since 2012 after two consecutive years of decline.
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"Construction is still simply too complex, too expensive, too heavily regulated, and it takes too long," said Ludwig Dorffmeister, a sector expert at economic think tank Ifo
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Ifo expects completed residential units to drop further to 185,000 this year
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Germany’s Construction Minister Verena Hubertz said those were "bad numbers", but added building permits were on the rise and state support for construction to benefit low-income households was at record highs
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In March 2026, construction permits were up 11.5% year-on-year at 21,800 residential units during the month