🏗️ Germany’s construction slump is still not over

Germany’s construction industry said on 2026-06-11 that the sector has not yet emerged from its downturn, despite tentative signs of recovery in parts of the market. The warning came as the association called for faster planning approvals, more reliable housing subsidies and higher municipal infrastructure spending.

The group said a fresh geopolitical price shock is clouding the outlook, adding to persistent pressure from high financing costs and weak residential demand. Reuters reported earlier this year that German residential construction fell to a 13-year low in 2025, while housing permits rose in 2025 for the first time in four years, suggesting the sector is stabilizing only gradually. CBRE has also said the market remains rental-driven because affordability for buyers is still constrained.

Why it matters for investors

The latest warning suggests Germany’s development cycle remains uneven, with any rebound likely to be concentrated in segments that benefit from public support, rental demand or lower entry costs. For capital targeting residential, the combination of slow approvals, subsidy uncertainty and elevated construction costs continues to delay project starts and extend holding periods. Municipal infrastructure spending could create selective opportunities, but the broader housing shortage is still not translating into a clean recovery in new supply.

➡️ Permits and early-stage recovery signals have not yet translated into a broad-based construction rebound.

➡️ Rental housing remains the stronger defensive segment as owner-occupier demand stays constrained.

The market is likely to remain supply-starved and cost-sensitive well into the next planning cycle.