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Turnaround in Sight for the Construction Industry; Political Pressure for Action Is Nonetheless Increasing

Author

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  • Martin Gornig
  • Laura Pagenhardt

Abstract

Real construction volume is expected to decline for the fifth year in a row: A decline of nearly four percent is expected for 2024 and it should fall by almost one percent in 2025. However, the construction industry may manage to reverse the trend in 2026, when real construction volume is projected to grow by two percent. However, this should not obscure the fact that the declines over the past years have created an even greater gap between construction demand and output. Infrastructure is ramshackle in many places, older buildings are frequently insufficiently insulated, and the housing crisis in cities has worsened. Political pressure, especially to fix the housing shortage, is increasing. Higher degressive depreciation on investments in new residential construction or measures to limit construction cost increases and to speed up related processes are important for improving the structural investment conditions in residential construction. However, these measures are not a quick solution to the housing shortage in cities; this issue requires an emergency program to restart social housing construction.

Suggested Citation

  • Martin Gornig & Laura Pagenhardt, 2025. "Turnaround in Sight for the Construction Industry; Political Pressure for Action Is Nonetheless Increasing," DIW Weekly Report, DIW Berlin, German Institute for Economic Research, vol. 15(1/2), pages 3-14.
    • Handle: RePEc:diw:diwdwr:dwr15-1-1
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    More about this item

    Keywords

    Construction industry; residential construction; public infrastructure; economic outlook;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions

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