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 Wood prices fall as housing construction cools in Europe
[Aug 10, 2023]

In Europe, fewer apartments will be completed by 2025. In Germany, a decline of 32% is expected.
European residential construction is in crisis. This is shown by calculations by the Euroconstruct research group, of which the Ifo Institute is a member.

Residential construction in Germany is set to plummet by 2025. For the timber market, this means a collapse in demand and falling prices.

General uncertainty
"In addition to the abrupt turnaround in interest rates and the jump in costs for construction services, general uncertainty about the medium-term development of real estate prices is leading to pronounced restraint among builders and prospective buyers," says ifo construction expert Ludwig Dorffmeister.
Sweden (minus 39%), Denmark (minus 33%) and Hungary (minus 29%) also expect a particularly sharp decline in completed housing between 2023 and 2025.

Too little promotion of new construction
"Only about one-third of the country experts currently report attractive new construction subsidies," says Dorffmeister. Positive impulses are coming from Ireland (up 17%), Portugal (up 15%), Spain (up 12%) and Slovakia (up 11%).

In Germany, orders are expected to plummet by 32% by 2025. According to the ifo economic survey in June, the shortage of orders in German residential construction has worsened.

Crash in Germany
34.5% of the companies surveyed report they have too few orders. In May, the figure was 33.9%. This is the highest figure since April 2010, and a new record was set for cancellations of existing orders at 19.2%, compared with 17.8% in May.
This does not bode well for the forestry and timber industry. A further decline in demand for wood is to be expected, and with it falling prices, unless valves open up in other markets. Massive declines in softwood log prices are already being reported, especially in bark beetle hotspots. The end of the line is not in sight.