Germany's housing gap is not narrowing — it is hardening

Germany's housing construction sector entered 2026 with fragile signs of stabilisation. In April, that stabilisation broke down.

The Ifo housing construction business climate index fell from -19.3 in March to -28.4 in April — the steepest single-month decline since April 2022, wiping out months of tentative recovery. "Geopolitical uncertainty is now also weighing on housing construction in Germany," said Klaus Wohlrabe, head of Ifo surveys. "With fragile supply chains and rising financing costs, the construction sector is facing several risks at once." Across the broader construction sector, the index fell nine points to -24, with business expectations dropping to -35.9. The Ifo's overall German business climate index reached 84.4 in April — its lowest level since May 2020.

The deterioration reflects not a sudden collapse in activity, but a sharp decline in expectations as new risks compound an already fragile economic model. Current conditions remain weak but broadly stable. It is expectations that are deteriorating — and doing so sharply.