RAKSU group (business cycles in the construction sector):
Construction to decrease slightly this year and more next year

Ministry of Finance 27.2.2020 14.30
News item

Construction is set to decrease by no more than two per cent this year, remaining close to last year's level, according to a report released by the RAKSU group (business cycles in the construction sector) on 27 February.

Total production in the construction sector will decrease this year. Construction was expected to decline more sharply, but now it seems that a sharper fall in production will not be experienced until next year. In 2021, production in construction is expected to fall by two to four per cent. This year, construction will continue more vigorously than anticipated owing to a large number of commercial property starts at the end of 2019.

Housing production has remained at a high level for a few years. In 2019, construction began on nearly 40,000 new homes, but production output is now expected to gradually return to the normal level. The decline in housing construction will be slowed down by continued economic growth and low interest rates. The RAKSU group estimates that construction will begin on 31,000–33,000 housing units in 2020. However, the number is expected to decline further in 2021, when housing starts will fall below 30,000 units. 

For house buyers and renters, the market conditions have remained positive. The housing market has been lively, and the supply of rental housing also increased sharply last year. A large number of housing units will continue to be completed throughout the current year.

Renovation construction has clearly slowed down from previous years. As the economy cools off, renovation of commercial properties in particular will slow down. Renovation is projected to increase by around 1.5% in the next few years.

Growth in civil engineering is expected to accelerate this year, partly explained by increased investment in basic transport infrastructure management. This year, civil engineering is projected to increase by 1–2%.

Pressures on construction prices have decreased, and some prices are now on a downward trend as the economy slows down. Demand for construction staff is also declining somewhat. Employment in the construction sector is expected to fall further this year and the following year.

Construction 2020–2021, spring (in Finnish)

Inquiries:

Sari Sontag, Senior Ministerial Adviser, tel. +358 2955 30181, sari.sontag(at)vm.fi

The business cycles in the construction sector (RAKSU) group led by the Ministry of Finance assesses the development of economic cycles in building construction, infrastructure construction and renovation. The reports of the RAKSU group examine the trends in the sector at the national level and, in part, at the regional level. In the reports, the situation is examined from the perspectives of volumes, prices, costs, financing, employment rates and the market for construction materials. The RAKSU group studies structural questions and needs for change in the construction sector over the long term. The group also gives recommendations on securing balanced development in the construction sector.