German construction costs soar in August

Source: Xinhua | 2018-10-11

Germany's average cost of building new homes soared in August, official figures published on Wednesday by the Federal Statistical Office show.

According to the Wiesbaden-based government agency, constructions costs rose by 4.6 percent in August from the same period last year, registering the highest monthly growth rate since November 2007 (plus 5.7 percent).

On a quarterly basis, construction costs went up by 1.3 percent between May and August 2018. The cost estimates are inclusive of value-added tax and are derived from diverse forms of housing construction, including shell construction- and extension works.

"This is hardly surprising: the construction industry is working at capacity limits; order books are bursting -- companies are fully booked for more than four months in advance on average," said Claus Michelsen of the German Institute for Economic Research (DIW), commenting on the figures.

Industry representatives are also attributing the rising construction costs to stricter regulations. The German Housing and Property Companies Association (GdW) estimates that the number of regulations governing construction processes in Germany has more than quadrupled since 1990.

Aside from the construction of homes, building new offices (plus 4.7 percent) and commercial facilities (plus 4.8 percent) also became markedly more expensive between August 2017 and August 2018. The average cost of building roads grew at an even faster pace of 6.7 percent while maintenance work was 4.1 percent costlier.