The construction industry is expected to enjoy moderate growth over the next two years but there are signs that it may be starting to plateau, according to new research into trends in 19 European countries.
Commenting on the research by the organisation Euroconstruct, Davide Maiello, our Head of Market & Business Intelligence for Europe & CIS, said construction output was still growing but likely to lose momentum in coming years.
“In 2017 growth was 4.2% and last year 3.1%,” he says. “Those days are over. Euroconstruct expects growth of 1.9% for 2019, slowing down to 1.5% next year and 1.4% in 2021. Meanwhile, growth in civil engineering will be radically higher than residential and non-residential segments.”
An underlying driver for the slow-down is the deterioration of consumer confidence for the first time in 10 years. “This may be the alarm bell that we are reaching a plateau for the construction market,” says Davide.
‘We must maximise opportunities’
Construction confidence and consumer confidence have gone hand in hand since 2009, growing gradually monthly until the start of this year when confidence levels started to slip.
“Overall the message is clear, construction growth will continue at least until 2021 but at a slower rate than the previous two years,” says Davide. “In the past we didn’t need to change our cards to win, but in the next two years we will have to play our cards carefully to maximise opportunities.”
Across the countries surveyed by Euroconstruct, the market for building new houses is expected to grow just below 0.5% per year over the next two years, with the important countries of France and Germany stagnating due to slowing demographic growth and increasing interest rates.
“However, this is balanced by countries that are growing their new residential markets such as Ireland, Portugal, Spain, Poland and the Czech Republic where house prices are rising strongly with a positive impact on this construction segment,” says Davide.
Renovation expected to enjoy steady growth
Residential renovation, meanwhile, is expected to enjoy more solid growth until 2021 with a yearly average of 1.2% across the 19 countries surveyed with the exception of Germany which is experiencing a negative trend.
“Euroconstruct expects the markets for non-residential new build and non-residential renovation to develop in line with each another at 1.2% and 1.3% a year,” says Davide. “We are seeing a positive push due to European funds and tougher emission and energy efficiency regulations that are easier to enforce in public buildings.”
In terms of non-residential, markets in Hungary, the Czech Republic, Poland, the Netherlands and Spain are growing quickly, while Germany, the UK, Sweden and Ireland have slipped into negative growth.
• The 19 countries surveyed by Euroconstruct represent 19% of the world’s construction market. Construction as a percentage of global Gross Domestic Product has fallen from a high of over 14% in 2000 to around 10% annually from 2013 to 2019.