DIW Expects Turnaround in Construction - Hope for Housing Seekers - Germany's construction sector rebounds after years of decline
Germany's construction sector is finally showing signs of recovery after years of decline. New forecasts suggest growth in both residential and public infrastructure projects, with output set to rise for the first time since 2021. The upturn is expected to give the country's economy a welcome boost.
The slump in construction appears to have bottomed out, thanks to stabilising costs and interest rates. In 2026, overall output is predicted to grow by 1.7%, marking the first increase in five years. Residential building is also picking up, with housing starts expected to climb by 2.4% next year.
Public infrastructure projects are leading the recovery. Civil engineering output alone could surge by nearly 10% in 2026, driven by special funds for infrastructure and climate neutrality. By 2027, total construction output may exceed €600 billion—almost one-eighth of Germany's entire economic output.
However, not all areas are rebounding equally. Office and factory construction remains weak, reflecting broader economic challenges. Still, the sector's overall growth is projected to accelerate in 2027, with a 3.4% rise in output. Housing starts, including new builds and renovations, could jump by 6.1% that year.
The construction industry's gradual recovery is set to play a key role in supporting Germany's economy. With public investments and stabilising conditions, output is expected to keep rising through 2027. The sector's performance will depend heavily on sustained funding and demand for infrastructure projects.
