Construction of residential buildings - Building permits in Bavaria fall sharply
Rising construction prices and higher interest rates continue to significantly shrink residential construction in Bavaria. According to the State Office of Statistics, the number of residential building permits issued in the first half of the year fell by 16 percent to 25,220.
The decline was particularly pronounced in larger cities, where building permits decreased by 25 percent compared to the previous year, and by 11 percent in rural districts. However, there was a slight increase in the addition of residential units in existing buildings, with authorities issuing 2.5 percent more permits for this purpose.
The Munich-based Ifo Institute expects the nationwide downturn in the sector to continue. Construction costs have "gotten out of hand," and the collective wage agreement for the construction industry will lead to further cost increases.
Despite the challenges, some developers are still investing in housing construction, aiming to take advantage of potential rental income. However, the escalating construction costs and rising wages due to the construction industry's collective wage agreement are causing concern for some investors.
