Germany’s Bundesbank expects a sharp decline in housing investment in the country this year, according to its chief economist, Jens Ulbrich.
(Bloomberg) — Germany’s Bundesbank expects a sharp decline in housing investment in the country this year, according to its chief economist, Jens Ulbrich.
Private residential construction will be the weak point in the development of Europe’s biggest economy, he added.
“That’s where a bit of a perfect storm is coming together: rising interest rates, noticeable declines in real disposable income, higher inflation, higher energy prices and higher credit risks,” Ulbrich told a press conference in Frankfurt on Wednesday.
While the Bundesbank expects investment to recover in 2024, given high housing demand, it won’t return to the levels seen in 2020 and 2021, Ulbrich said.
According to the Bundesbank’s quarterly bank lending survey, German banks tightened guidelines for housing loans throughout last year, which led to the largest collapse in demand on record since the institution started collecting data in 2003.
The Bundesbank expects Germany’s economy to contract by 0.3% or 0.4% in the first quarter of 2023, Ulbrich added. From the middle of the year, real disposable incomes are expected to rise again as the economy recovers, he said.
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