After two years of recession, the German economy is showing the first signs of cautious stabilisation. Price adjusted gross domestic product for the full year 2025 was 0.2% above the previous year’s level, marking a slight trend reversal after previously declining growth rates.
Despite the continuing challenging conditions, the German construction industry is looking ahead to 2026 with cautious optimism. After four years of decline, early indicators suggest slight stabilisation, although market conditions remain challenging, with high levels of uncertainty due to tariff developments and international conflicts.
Market Outlook
A sustainable recovery in the construction industry remains dependent on a largely stable inflation rate within the range of 2.0 to 2.5 per cent, declining producer prices for industrial goods, and an easing of pressure on procurement markets. Public infrastructure investments remain the key driver of growth and are expected to increasingly stimulate throughout the year. Prices continued a steady rise in 2025, with building construction prices rising an average of 3.4% as reported by the Statistisches Bundesamt (Destatis). Nevertheless, the overall picture remains mixed. High construction costs, tighter financing conditions and continued reluctance among private investors are still slowing progress. Additionally, recent rises in oil and gas prices are placing a significant strain on manufacturers of building materials, worsening the business climate, leading to production cuts and increasing price pressure, which could undermine the recovery.
At a glance
Turner & Townsend’s construction price inflation forecast for 2026
Average cost price escalation for building construction for 2025
Building construction sales orders growth in 2025
Average quarterly building construction cost increase in Q4 2025
Average quarterly building construction cost increase in Q1 2026
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