The business cycle group of the construction industry estimates a challenging year for the sector, with prospective growth predicted for the following year.
For the construction industry, the start of the year appears grim according to the economic cycle group’s report titled “Construction 2024–2025: In the Spring 2024 report.” The group is under the purview of the Ministry of Finance.
The report highlights that the construction sector still faces a bleak outlook. A minor recovery in housing demand is expected due to the anticipation of lower interest rates. However, a full recovery in construction is a long way off, with housing starts expected to decrease until early 2024 due to oversupply.
The number of building permits for apartments is less than half compared to the previous year and housing construction starts are significantly fewer than the previous year.
There has been a decrease in the number of completed buildings since the fall.
The business cycle group predicts a decrease in the number of completed buildings in the upcoming spring.
The group’s recent report estimates a decrease in construction for the current year.
However, a revival is expected by the end of the year. The Ministry of Finance states that anticipated decrease in interest rates and accelerated economic growth will lead to a resurgence in construction by 2025.
The construction industry’s economic analysis group predicts a 3–4 percent decrease in construction this year.
The assessment for the following year is decidedly positive.
Factors contributing to the demand for apartments remain, despite the current stagnancy in the housing market, according to the working group.
In terms of office building, the changes are less significant.
With the slowdown in construction costs and the availability of resources, more planned projects have become profitable, thereby stimulating construction.
Since the reduction in repair construction in 2015, the working group doesn’t anticipate a turnaround before 2025.
Renovation construction represents about 52 percent of house construction.
Renovation construction has surpassed new construction due to a sharp decrease in the latter.
The report indicates that subdued renovation construction is evident in the decreased intentions to renovate apartments since the start of 2022.
The decrease is attributed to high repair costs, increasing interest rates and weakened consumer purchasing power.
