Baden-Württemberg. Südwest Sparkasse President Peter Schneider has warned of a collapse in capacity in the construction sector. “There are the first bankruptcies. And the longer this situation lasts, the more will follow,” said Schneider to the German Press Agency in Stuttgart. This reduction in capacity – as in the catering industry during the corona pandemic, for example – will lead to many people permanently looking for another job.
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Schneider: A lack of capacity is immediately reflected in the price
“Essentially we have full employment – despite this rather modest economic situation,” he said. Experience has shown that people do not return to their old job even after a crisis. However, there is still a need for investment in construction. “If we get into a period of heavy construction activity again at some point, the capacity will no longer be there. This will immediately be reflected in the price.”
There has been a mood of alarm in the Baden-Württemberg construction industry for months. In particular, the increases in material and energy prices as well as loan interest rates are causing problems for the industry. In the first half of 2023, the number of approved apartments in the country fell by 21 percent to 19,568. Around 350,000 people work in the southwest construction industry.
Baden-Württemberg
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A slump in credit commitments from savings banks
The slump in the construction sector was also noticeable at the 50 savings banks in the southwest. Loan commitments for private housing construction have been languishing at a monthly low of 400 to 500 million euros for a long time, said Schneider. You’re stuck at this point, there’s zero momentum. “To put it into perspective: At our peak in recent years we had 1.4 billion. Every month.”
In addition to the increases in construction costs and interest rates, the reasons for this are the high land acquisition and additional costs. Added to this is the uncertainty when it comes to heating. “In parts this is a home-made crisis,” said Schneider. Politicians act far too timidly and some of those involved lack a basic understanding of economics. “There are too many people in important positions who have little idea.”
Schneider for reducing additional purchase costs and deducting interest on debt
The federal, state and local governments all too often blame the issues on each other. “Then the drama begins,” said Schneider. “I say: If you turn a significant amount of four or five screws, then the thing will be running again very quickly. Because the demand on the market is there.”
Among other things, Schneider called for a reduction in additional purchasing costs and a reintroduction of the private debt interest deduction – i.e. the possibility of deducting building interest from taxes. “We’ve had all of this before. I just have to pull it out of the drawer, write 2024 on it and off we go,” he said. The tax losses from the crisis in the construction sector are now greater than the costs for these measures. “I have to feed a cow before I milk her,” he said. dpa