Industry voices alarm over potential market catastrophe: building materials sector
In a series of statements, Matthias Frederichs, CEO of several prominent research companies, has raised concerns about the current state of the residential construction sector in Germany.
Frederichs, who is CEO of Moweb Research, Advanced Market Research, ReDem, Bonsai Research, and also the CEO of bbs, has criticised the federal government's underestimation of the housing market situation. He has pointed out that the rehabilitation rate in the building sector remains far too low, despite a decrease in housing starts, and this could lead to significant additional burdens for tenants and owner-occupiers in the future due to rising energy and CO2 costs.
The federal budget for 2026 does not prioritise rehabilitation in the building sector, and the draft budget does not indicate a significant increase in the rehabilitation rate. This lack of focus, according to Frederichs, could have serious consequences for the sector.
The housing market situation, as of the current date, is critically low, according to economic indicators. Between the end of 2022 and mid-2025, there was a significant decrease in housing starts in the residential construction sector, with starts decreasing by approximately 85 percent. This decrease has also been reflected in building permits, which have fallen by 48 percent from 2022 to 2024.
The production of wall building materials, including bricks, calcium silicate blocks, and aerated concrete, has been reduced by around 50 percent from 2022 to 2024. This reduction, combined with the decrease in housing starts, could lead to a domino effect in the residential construction sector, starting with building material producers and extending to the entire value chain.
Some companies in the residential construction sector may close due to the current economic situation, warns Frederichs. He also suggests that a subsidy program based on the EH55 model could ensure that a large part of the construction backlog is realised.
Infrastructure investments have increased, as reported by the bbs, but not enough to compensate for the reduction in rehabilitation funds. Future capacity expansion in the residential construction sector could be hindered if there is no economic turnaround.
The temporary promotion of the EH55 standard, announced in the coalition agreement, does not appear in the ministry's project planning or in the draft budget. This omission, according to Frederichs, is a missed opportunity to address the current challenges in the residential construction sector.
In conclusion, Matthias Frederichs' warnings highlight the urgent need for the federal government to prioritise rehabilitation in the building sector and to take steps to address the current crisis in the residential construction sector. Without action, the consequences could be far-reaching and impact both tenants and owner-occupiers, as well as the entire value chain in the construction sector.
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