“The renovation market and civil engineering are less volatile. Here the green transition is kicking in on activity in most countries.”
Across Europe, the last years has been an economic story about inflation. Consumer prices have risen significantly and so has the prices of building materials. The reaction has been a sharp increase in interest rates. When both building costs and financial costs surge, the business cases for building projects are challenged. As a result, the level of building starts has been disappointing in most of Europe.
The housing market has reacted asymmetrical in the countries due to different refinancing frequencies. Now the excess savings from the pandemic that has supported private consumption is gone. Next up is wage increases necessary to regain the real wage levels from before the pandemic, which will also spill over on core inflation. Thus, we are entering 2024 on a low but we expect the construction activity to turn during 2024 as interest rates are lowered and the underlying need for both residential and non-residential buildings sets in.
The renovation market and civil engineering is another story, where the volatility is somewhat lower. Here the green transition is kicking in on activity in most countries.
