October 10, 2017 / 2:39 PM / 2 months ago

Cost of building homes in Germany hits 9-year high

BERLIN, Oct 10 (Reuters) - The cost of building homes in Germany hit a nine-year high in August, data showed on Tuesday, with industry associations blaming capacity bottlenecks and new regulations.

Housing construction costs in Europe’s largest economy rose by 3.1 percent in August compared with the same period a year earlier, data from the Federal Statistics Office showed. That was their sharpest rise since August 2008.

Germany’s economy is expected to grow by around 2 percent this year, helped by construction as the government raises spending on infrastructure and refugees.

Heiko Stiepelmann, deputy head of Germany’s HDB construction industry group, said the higher costs were the result of supply and demand.

“The prices reflect shortages given the strength of the construction sector,” he added.

The construction industry is expanding again after years of sluggish growth and the number of construction workers is expected to exceed 800,000 next year for the first time since 2003.

Axel Gedaschko, president of the GdW housing and real estate association, said the number of building regulations had more than quadrupled to 20,000 since 1990.

Stiepelmann said: “Whether it’s noise, fire protection or energy saving and accessibility regulation, it’s all driving the costs.”

The construction industry is therefore urging the government not to step up regulations such as on energy-saving while the housing industry is calling upon the new government to support the construction of buildings made with prefabricated parts.

The cost of constructing commercial buildings also increased by 3.3 percent. The construction sector saw revenues rise by 8 percent in July compared with the same period a year earlier. (Reporting By Rene Wagner; writing By Riham Alkousaa; editing by Michelle Martin and Peter Graff)

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