Construction: House price cycle unlikely to come to an end in 2018
Construction investment recorded a year-over-year increase of around 3 1⁄2% in
2017 and looks set to gather further steam. Our expectation of 4% for 2018 is –
as in the preceding years – likely to be dominated by residential construction,
whereas growth contributions from commercial and public construction will be
less pronounced.
In view of the flourishing labour market and on-going
immigration, housing demand remains at elevated levels. As in recent years,
housing investment consequently edged up only slowly in 2017, rising by
roughly 5%. Since the beginning of the house price cycle in 2009, the housing
shortage hence increased for the ninth year in a row.
Overall, more than 1
million additional residential units are meanwhile needed in Germany, above all
in metropolitan areas and major cities. In the years ahead, the situation ought to
ease only gradually, given the particularly low price elasticity.
EU Forecast
euf:ba18h:103/nws-01