Increase in construction service costs by 3.2%
In Q2 2025, construction costs in Baden-Württemberg have been on the rise, reflecting a cautious environment marked by moderate inflation and industry challenges. According to the State Statistical Office, the prices for new construction of residential buildings increased by 3.2% compared to Q2 2024.
The overall consumer price inflation rate in Baden-Württemberg rose to around 2.3% year-on-year by June 2025, with increased costs in various sectors, including construction, where input prices such as materials have been subject to upward pressure.
Despite the rising prices, the German construction sector is facing headwinds. A predicted real decline of 1.8% in 2025 is expected due to high material costs, weak external demand, and fewer building permits being approved. The building permits in Germany declined slightly by 0.2% year-on-year in early 2025, indicating a reduction in construction activity that may temper price increases for new projects.
While residential construction prices are trending upward moderately at around 2.7% year-on-year, the broader construction market is under strain, potentially limiting price growth in non-residential segments. Given the overall decline in construction production index by 3.3% year-on-year in early 2025 and the influence of tariffs and trade barriers, non-residential construction may experience either stagnant or less robust price growth compared to residential construction.
In the residential sector, heating systems and central water heating systems became significantly more expensive, by 5.5%. On the other hand, floor screeding work became slightly cheaper, by 0.7%. Cosmetic repairs in apartments became 4.2% more expensive, and prices for finishing work have increased particularly sharply, by 4.2%. Work on outdoor facilities increased by 3.4% during the same period.
The costs for roofing work increased by 5% in Q2 2025. The strongest increase was recorded for electrical, safety, and information technology systems, with an increase of 8.3%. In civil engineering, road construction work became significantly more expensive again, by 4.4%. However, masonry work became slightly cheaper in Q2 2025 (-0.4%). The prices for bridges in road construction only increased by 1%. Joinery and carpentry work increased by 4% in Q2 2025.
In summary, for Q2 2025 in Baden-Württemberg, residential construction prices are trending upward moderately at around 2.7% year-on-year, supported by inflation and cost pressures, while the broader construction market is under strain, potentially limiting price growth in non-residential segments amidst reduced construction activity and economic headwinds.
Economic and social policy discussions in Q2 2025 might include measures to address the challenges facing the construction industry, given the observed price increases and projected decline in overall construction activity, as well as the impact on finance due to the raised costs in various segments such as residential construction and electrical systems. The cautious environment marked by moderate inflation and industry challenges could potentially influence the formulation of economic and social policy in Baden-Württemberg.
