The downturn in Germany's residential construction sector worsened in July, with a record number of companies reporting dwindling orders, as higher interest rates and rising construction costs hamper new business.
The current housing market is facing challenges due to rising interest rates and higher prices, leading to a slowdown in home sales, but the market is more resilient and better equipped to handle these fluctuations compared to the Global Financial Crisis, thanks to cautious lending practices and stricter regulations.
Main topic: German construction technology company Schüttflix raises €45 million in funding to capitalize on growth opportunities in the cooling construction industry.
Key points:
1. Schüttflix has raised €45 million in a financing round led by founders and existing investors.
2. New investors include FJ Labs, DEVK Insurance, various family offices, Goldbeck, and IK Umwelt.
3. The fresh capital will be used to take advantage of growth opportunities in the cooling construction industry and improve efficiency in the value chain for construction companies.
China's property crisis, led by embattled property giants like Evergrande, is causing devastating consequences for small businesses and suppliers who are owed large sums of money, putting both market confidence and debt repayments at risk. The crisis has affected the entire industry and could worsen if immediate actions are not taken to prevent contagion and spillover fears. The Chinese government is urged to abandon restrictive measures on real estate credit, carry out bankruptcy proceedings for developers with capital-outflow problems, and stop intervening in the market to stabilize home prices. The outlook for Chinese developers is deteriorating, particularly for distressed developers, while state-owned developers have a stable outlook. The Chinese housing market is facing a severe crisis that is worse than Japan's market in the early 1990s, posing challenges in filling the gap in spending left by the collapsing housing market.
Real estate investor Sean Terry predicts a "Black Swan" event in the US housing market within the next year due to affordability pressures caused by high interest rates and housing prices, which could lead to a market crash. However, experts argue that a crash like the one in 2008 is unlikely due to the current housing shortage and limited supply of homes. The future of the housing market will depend on factors such as economic stability, mortgage rates, and homebuilders' ability to increase supply.
The crisis in Germany's residential construction sector is worsening, with a record number of companies reporting cancelled projects due to high costs and a lack of orders.
The largest residential landlord in Sweden, Heimstaden Bostad, is facing a funding crisis, indicating the severity of the property crisis in the country, which has the highest indebtedness in Europe with a property market heavily reliant on bank loans, prompting the government to prepare for potential action to secure financial stability.
China's housing crisis continues as thousands of building projects are halted or slowed, leading to defaults and restructuring, a loss of confidence in the market, and a decline in sales.
The U.S. housing market is facing a shortage of homes, which is driving up prices and making it difficult for buyers to find affordable options, and the problem may get worse as builders become less confident and hesitant to construct new homes due to high mortgage rates and construction costs.
German housing prices experienced the largest decline since records began in the second quarter of 2023, due to high interest rates and rising materials costs, creating a crisis in the construction industry.
Germany, once the beating heart of the European economy, is facing structural challenges and a sense of decline, with forecasts predicting slow growth and contraction in the coming years due to its heavy reliance on manufacturing and struggle to transition to renewable energy and a service-based economy.
Germany's government has agreed on a 14-point plan to address the housing crisis, which includes putting stricter building insulation standards on hold and investing €18 billion in the sector by 2027. However, the plan has faced criticism from the construction industry and environmental groups.
The German government is allocating 18 billion euros for affordable housing and has put proposed building regulations on hold to support the struggling construction industry, which has been hit by high interest rates and falling housing prices.
The strain from interest rate hikes is starting to impact the real estate market, particularly in Germany and London, as well as the Chinese property sector; corporate debt defaults are increasing globally; banking stress remains a concern, especially regarding smaller banks and their exposure to commercial real estate; and the Bank of Japan's tighter monetary policy could lead to a sharp unwind of investments, potentially impacting global markets.
Germany's housing market is experiencing a decline, with residential home prices falling by 9.9% year over year, making cities like Berlin, Leipzig, Munich, and Hamburg attractive for luxury buyers due to their long-term growth potential and more diverse economies.
Luxembourg, known for its high wages and financial attractiveness, is currently facing a major housing crisis due to a lack of housing production and soaring house prices, making it increasingly difficult for residents to afford rent or buy a home.
The housing market is currently in a bad place for buyers, but sellers are also facing challenges, with high mortgage rates and dropping prices. Although the market may have hit rock bottom, there may be further pressure on sellers in the future.
The housing market is experiencing an unsustainable bubble with surging home prices and a shortage of supply, raising concerns about a potential crash, according to Sheila Bair, former federal regulator during the subprime mortgage crisis. While some experts believe housing prices will continue to rise, others, including Bair and investor Jeremy Grantham, warn of a significant downturn in the market. However, stricter lending standards and homeowners with more equity make a repeat of the subprime crisis less likely.
German Chancellor Olaf Scholz is facing demands to address the property crisis in Germany's economy, as the nation's building industry proposes measures to mitigate the worst property crisis in a generation, including preventing mass layoffs and stimulating building activity.
The high demand from first-time homebuyers, coupled with a lack of supply, is leading many young buyers to rely on financial assistance from family members for down payments, creating a volatile housing market where "anything goes" to get deals done, warns National Association of Home Builders CEO Jim Tobin.
The housing market is expected to experience a downturn in the near future due to factors such as high mortgage rates, high home prices, and limited supply, making it increasingly difficult for homebuyers to afford a home.
