Among other things, an exciting lecture by Pro. dr Peter Filzmaier the audience.
©Innung Bau
Traditionally, Vorarlberg’s building contractors meet at the beginning of the year for industry exchange as part of the Vorarlberg Construction Days. After years of constant growth, the Vorarlberg construction industry sees the economy slowing down.
Three years of pandemic, the Ukraine war, the associated high energy prices, inflation and higher material prices are definitely having an impact. Nevertheless, the domestic construction industry remains a stable economic factor.
Participants from all over Austria were recently welcomed to the 51st Vorarlberg Construction Days in Lech. A highlight was the lecture by Univ.-Prof. dr Peter Filzmaier, who spoke about the relationship between entrepreneurs, politics and the media and was able to give the participants more in-depth insights. Traditionally, on the second day, the economic data for the past year was explained by representatives of the federal construction guild. Subsequently, Economics Minister Mag. Marco Tittler presented country-specific data, upcoming major projects and possible forecasts for the coming year.
The situation in the residential construction sector is currently drastic, since the overlapping of several factors has created extremely challenging framework conditions for domestic companies. Due to this overall situation, domestic contractors and housing developers expect a decline in the residential construction sector, and some even assume a temporary standstill. Property developers (both commercial and non-profit) are facing difficult challenges, which will generally lead to more defensive behavior on the market. However, the industry does not share assessments that construction costs will fall in the future. Further price increases of up to 20 percent have already been announced for concrete and building raw materials.
Credit requirements – housing subsidies
The stricter (only applicable nationally) rules for lending make it difficult or impossible to keep home ownership affordable. In particular, the strict requirements for the equity ratio and the limitation of loan installments based on net household income represent insurmountable hurdles, especially for young people. In addition, there are high inflation, rising interest rates and highly volatile energy prices, which are causing increasing concern for people. Housing subsidies will play a much more important role in the future – it remains to be seen how the requirements of the revised guidelines can be met. In any case, clearer, clearer guidelines are to be welcomed, but it must be possible to depict the funding on the market. There is a desire to increase the maximum share of basic costs specified in the directive in order to adapt the subsidy to (market) reality.
The order books, some of which are still full, should not hide the fact that the earnings situation for domestic companies has deteriorated. Disproportionately high increases in energy and material prices can usually not be passed on to the client due to the contract and must be borne by the companies. For 2023, a double-digit decline in order volume is expected in all areas. Nevertheless, the construction industry is proving to be a stable and crisis-tested industry as well as a reliable employer and contractor. Politicians must take swift countermeasures to the massive increases in energy prices, and the stricter award criteria for real estate loans that came into force in August 2022 must also be relaxed as quickly as possible.
