European Residential Construction Cools Down

By 2025, fewer dwellings will be completed in Europe. This is evident from calculations by the EUROCONSTRUCT forecasting network, of which the ifo Institute is a member. “In addition to the abrupt turnaround in interest rates and the hike in the cost of construction services, the general uncertainty about the medium-term development of real estate prices is causing widespread restraint among builders and prospective buyers,” says ifo construction expert Ludwig Dorffmeister.

For 2023 to 2025, the decline in completed dwellings is expected to be particularly sharp in Sweden (-39%), Denmark (-33%), Germany (-32%), and Hungary (-29%). “Only about one-third of the countries’ experts currently report that attractive subsidies are available for new construction,” Dorffmeister says. Positive impetus is coming from Ireland (+17%), Portugal (+15%), Spain (+12%), and Slovakia (+11%).

According to the ifo Business Survey in June, the shortage of orders in German residential construction continues to worsen, with 34.5% of the companies surveyed reporting that they have too few orders. In May, that figure was 33.9%. This is the highest proportion since April 2010. A new record of 19.2% was set for cancellations of existing orders, up from 17.8% in May.