The European construction industry sees weaker growth in the future

After two great years, the outlook for European housing construction has turned much darker. Construction activity as a whole will decrease by almost 3 percent in 2023–2024, but will recover slightly in 2025. In the current year, the volume of new construction will decrease by 2 percent as a result of the economic decline caused by the war in . In contrast, the decline in on existing buildings in 2023 and 2024 is largely due to a reduction in ’s previously extremely generous for renovation. “In most European countries, however, the recent energy price shock is likely to increase investment in existing housing,” says Dorffmeister.

“Civil engineering volumes face several major challenges,” he adds. The necessary investments in energy supply, expansion of the transport network and public transport will cause civil engineering to grow by 2.9 percent in 2023, 1.8 percent in 2024 and 2.2 percent in 2025. The biggest increases are expected in Italy, , and . Only in is the market shrinking.

In Germany, the pressure to build new homes is increasing. “The main reasons for this are a significant increase in mortgage interest rates, a sharp increase in construction costs and a decrease in federal subsidies for new home construction,” says Dorffmeister. The results of Ifo’s December survey showed that order backlogs continued to decline at a high level for the fifth month in a row. The new orders that the industry desperately needed did not materialize. “Conditions for private developers and housing associations have deteriorated drastically,” says Dorffmeister. However, the industry’s long lead times will likely moderate the impact of this development on construction for the being. The finishing trade in particular will continue to be lively in the coming months due to capacity bottlenecks.


Source: ifo Institute

Source: The Nordic Page

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