Germany Construction Downturn Deepens As Costs Rise

Germany’s construction sector downturn is worsening as rising material and energy costs continue to pressure companies and slow recovery efforts.

Marcus Nachbauer, who chairs the Bundesvereinigung Bauwirtschaft, said recent instability in the Middle East, including temporary disruptions around the Strait of Hormuz, has triggered another wave of price increases for key building materials and energy inputs, adding pressure to an already fragile industry.

He said that materials such as bitumen, cement, concrete, plastics, diesel, and heating oil have all become significantly more expensive in a short period. According to a survey cited by the association, roughly 80% of firms reported noticeable increases in the price of bitumen and plastics alone.

Despite the challenges, the industry group reported that its member companies collectively recorded revenues of about €432 billion ($500 billion) in 2025, representing a modest 0.8% increase, largely driven by higher prices rather than increased construction activity.

Looking ahead, the association expects revenues in 2026 to remain broadly stable, though it warned this would likely reflect continued inflationary effects rather than a genuine rebound in building output.

Nachbauer called for faster approval and planning processes in Germany, along with more dependable housing subsidies and stronger infrastructure investment that directly benefits local authorities.

He stressed that construction should be viewed as a key driver of economic recovery, arguing that the sector has the capacity to help pull Germany out of stagnation if the right conditions are put in place.