Decrease in building permit approvals by 16.5% observed during the first half of 2025
Rising Construction Costs and Declining Projects in Saxony-Anhalt's Residential Sector
According to the State Statistical Office of Saxony-Anhalt, the first half of 2025 has seen a significant shift in the residential construction sector. The activity in residential buildings decreased by 18.2%, while non-residential buildings experienced a more modest 11.8% drop.
The estimated construction costs per square meter of living space in residential buildings have seen a steady increase. In 2020, the cost was 1,415 EUR, which rose to 2,313 EUR in the first half of 2025. This represents an increase of 1.2% from the first half of 2024 and a significant jump from 1,185 EUR in the first half of 2015.
The number of construction projects is also on the decline. Compared to the first half of 2024, the number of projects is down by 16.5%. This is the lowest number of projects since the first half of 2020, with a total of 1,195 projects approved in 2025, a decrease of 3.5% compared to the same period in 2024.
Despite the rise in construction costs, Saxony-Anhalt remains relatively affordable compared to other German states. Median house prices in the region are currently around €1,557 per square meter, with an increase of approximately 50% since 2015.
The use of prefabricated parts in residential construction offers several advantages. These include speed of construction, cost efficiency, improved quality and sustainability, and labor savings. By reducing material waste, labor costs, and reliance on skilled on-site labor, prefabricated parts can help mitigate the impact of rising construction costs.
In the first half of 2025, a total of 1,414 apartments are planned to be built, a decrease of 5.2% compared to the first half of 2024. Of these, 996 are new builds and 418 are renovations of existing buildings. The estimated construction costs per square meter of living space in new residential buildings in the first half of 2025 are 2,313 EUR. In comparison, the use of prefabricated parts results in an average cost of 2,126 EUR per square meter of living space.
The cost of constructing a square meter of living space in conventionally built residential buildings in the first half of 2025 is 2,339 EUR. This difference highlights the cost efficiency benefits of prefabricated construction methods.
In addition to the decline in residential building projects, there has also been a decrease in non-residential building projects, with a 5.8% drop in residential building projects and a 2.7% drop in non-residential building projects compared to the first half of 2024.
These trends suggest a challenging environment for the residential construction sector in Saxony-Anhalt, with rising costs and declining projects. However, the benefits of prefabricated parts offer a potential solution to these challenges, providing cost efficiency, faster construction times, and improved quality.
Investors may find opportunities in other industries such as finance or real-estate, given the challenging environment in Saxony-Anhalt's residential construction sector. Despite the rise in construction costs, the use of prefabricated parts in residential construction can lead to cost efficiency benefits, potentially making real-estate investing less daunting. On a positive note, the increased cost of constructing a square meter of living space in conventional residential buildings could drive interest in the prefabricated real-estate business.
