Construction: After the prefabricated house boom: is the crisis now coming?

Johannes Schwörer has already had three crises as a prefabricated house builder.

Construction: After the prefabricated house boom: is the crisis now coming?

Johannes Schwörer has already had three crises as a prefabricated house builder. The first at the turn of the millennium with insolvencies of large construction companies. The second in the mid-2000s with the abolition of the home owner allowance. The third was the 2008 financial crisis. A fourth is emerging. Since the beginning of the year it has become more uncomfortable, reports the managing director of SchwörerHaus, which is based in Hohenstein in Swabia. Responsible for this: "Subsidy chaos, increased interest rates and inflation."

The company calls it the "multi-crisis". Starting with the fact that there are almost no more subsidies for new buildings, says Schwörer. The current funding with the unwieldy name "Quality Seal Sustainable Building" - also known as QNG - is complex and the details have not yet been finally regulated.

The increased interest rates, which have climbed to almost four percent since the beginning of the year, do not make it any easier for potential home builders. Increased construction prices do the rest. Loan requests are falling. Jan Winck, who works for the financial service provider Dr. Small customers in the Allgäu looked after. "In my office, dreams of owning a home are bursting like soap bubbles," he reports, looking back at the past few weeks. The rosy times are definitely over now.

Great uncertainty

"Four percent seems like a lot because we were used to interest rates around one percent," says Schwörer, who has headed the family business since 1998. Relatively speaking, however, this is still a very reasonable interest rate.

The uncertainty caused by inflation weighs more heavily for his industry. "It's very important that you don't make the end consumer so insecure that he'll go into a snail's shell and do nothing at all," he says. This would then affect many more sectors of the economy.

His industry is now clearly feeling the reluctance on the market. "The sales figures are declining significantly," says Schwörer. "That doesn't matter because we have a large order backlog," says the 55-year-old. But even that was eventually worked off.

On average, Schwörer sells 1,000 houses a year. In 2021, the company even sold 1,200. Now the house builder only expects 700 contracts to be signed for 2022. Other prefabricated house suppliers are also reporting significantly fewer orders.

Long way

Builders have to pay about 300,000 euros for a prefabricated house in timber frame construction. Many companies offer a fixed price guarantee. Because the house walls are made in the factory, assembly on site only takes a few days. But before that there is a long way to go with applications for building permits, reports and planning. At Schwörer, for example, it takes 18 months for the house to be delivered.

According to the prefabricated house builder, less demand does not mean that prices will fall. Material prices are just too high for that. The Federal Association of German Prefabricated Construction (BDF) takes a similar view. Individual products such as wood have become cheaper because global demand has decreased, says BDF President Mathias Schäfer. "We can't say right now whether this is a long-term effect."

According to the Federal Association, almost every fourth (23.1 percent) newly built single or two-family house in Germany is now prefabricated. Since the turn of the millennium, the market share has been increasing continuously. At that time it was still 13.5 percent.

The reputation of the buildings, formerly frowned upon as catalog houses, is constantly improving. Most are planned individually. What makes them climate-friendly, according to the federal association, is the renewable raw material wood. It also provides good insulation.

Above all, builders in Baden-Württemberg, Hesse and Bavaria rely on prefabricated houses. Most of the companies are also located in these federal states, says association president Schäfer. But the proportion in the west and north is also increasing.