The German construction sector is showing signs of recovery after several difficult years, but the outlook remains significantly weaker than expected. Construction development forecasts have been revised downwards, while the housing segment remains one of the weakest links in Europe's largest economy.
According to current data from the German Central Association of the Construction Industry (ZDB), real turnover in basic construction is expected to grow by around 2.5% in 2026. The main driver of the improvement is infrastructure construction, which is receiving additional impetus from public investment.
Housing construction remains a problem
In the housing segment, the situation is significantly more difficult. The three-year decline in building permits has already had an impact on companies' turnover, which has fallen by around 2%.
However, there are initial signs that the market may have passed its lowest point. Data from the Federal Statistical Office of Germany show that in 2025, new orders in high-rise construction were nominally 10.1% higher than the previous year. In residential construction, the increase is also around 10%, although it comes from a very low base.
This is still not enough to solve the structural shortage of new housing in Germany. The ZDB points out that the country needs to build over 300,000 homes per year, and current activity remains far from similar levels.
Infrastructure is pulling the sector up
The picture is significantly better in infrastructure construction. Road, rail and other public infrastructure projects are expected to be among the main sources of growth.
Additional stimulus comes from German public investment programs and special funds for infrastructure modernization.
The difference between the individual segments is already visible in the sentiment of companies. Around 80% of the surveyed enterprises in infrastructure construction define the state of their business as good or rather good, and for companies engaged in road and rail construction, the share reaches 86%. In residential construction, positive assessments are below 60%.
Business is more optimistic for 2026.
Despite the problems, sentiment among construction companies is gradually improving. The StimmungsBAUrometer survey shows that 28% of companies expect their business to improve in 2026, while 17% predict a deterioration.
However, companies continue to point to serious obstacles to their development. These include the political and regulatory environment, lengthy permit procedures and the shortage of qualified labor. Around 45% of the construction companies surveyed still do not see a solution to the personnel problem.
Financing and interest rates, which were among the main problems of the sector after the sharp increase in the cost of credit, now have a lesser impact on companies' attitudes.
New housing remains the key challenge
The data outlines a two-speed construction market. Infrastructure investments are enabling a gradual recovery of the sector, while housing construction is still struggling to recover from the prolonged downturn.
This is particularly important for the German property market, as insufficient new construction is limiting the supply of housing in large cities. Even if orders improve, it will take time before the recovery leads to a noticeable increase in the number of new housing completions.
Detailed statistics on average property prices in Bulgaria by city and neighborhood can be found at imot.bg