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Germany’s Construction Costs Rise 3.2% in May, Outpacing Inflation

Category-specific price jumps pose fresh challenges for the government’s housing expansion plans

Blick auf eine Baustelle in der Hamburger Hafencity bei den Elbbrücken.
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Overview

  • The cost of new residential construction climbed 3.2% year-on-year in May, exceeding the 2.1% consumer inflation rate.
  • Prices for electrical, security and IT installations climbed 5.7%, timber and carpentry works rose 4.8% and heating systems increased by 4.5%.
  • Office building costs rose 3.5%, commercial development by 3.4% and road construction by 4.4% over the same period.
  • Since 2022, war-driven surges in raw material and energy prices have been the main drivers of the building cost inflation.
  • The Union-SPD government has introduced regulatory relief for municipalities, a record social housing budget and a Bau-Turbo fast-track approval scheme to boost housing supply.