The construction sector is facing dark economic forecasts for this year 2020 and for the next.
The number of new works started has decreased considerably this year compared to 2019 and official forecasts suggest that the fall will go further in 2021. To this we must add a downward trend in some prices and a decrease in the number of employees.
The latest report released by the Raksu group (business cycles in the construction sector, led by the Ministry of Finance), foresees that construction production is set to decrease by no more than 2% this year, remaining close to last year's level.
Demand for construction staff is also declining somewhat. "Employment in the construction sector is expected to fall further this year and the following year," the report says.
Source: Statistics Finland.
According to Statistics Finland's data, construction industry employed 198,000 people in 2018 and 193,000 (this is 5,000 less) in 2019.
Sharper fall in 2021
The interesting thing about economic estimates is that they are not always fulfilled. In fact, in 2020 total production in the sector was expected to decline more sharply. Now, experts say that "a sharper fall in production will not be experienced until 2021."
This year, construction will continue more vigorously than anticipated owing to a large number of commercial property starts at the end of 2019. However, in 2021 production in construction is expected to fall by 2% to 4%, the report says.
"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," the report foresees.
40,000 new homes
In Finland, 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.
According to the Raksu group report, 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% to 2%.
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 at the national level.