The 2013 building construction forecast (Chart 2) dealt separately with new building construction and renovation. The short-term
predictions made in 2013 have been realised to a large extent. Renovation will reach the 2008 volume in 2017. The sector is
expected to grow more rapidly in the next few years than the 2013 long-term forecast predicted. The ageing of the building
stock and the good financial standing of consumers have accelerated renovation growth. The new-construction forecast was based
on the fact that since the volume of new construction shrank drastically earlier, economic growth will speed it up more than
renovation. The forecast for new construction until 2025 has stayed fairly well on the track predicted in 2013. The present
low level of interest rates is boosting both renovation and new construction as well as economic growth. However, a US-driven
rise of interest rates has already begun and the impact of low interest rates on European construction will take effect from
the beginning of the 2020s.
Growth prospects vary in different parts of Europe. The wealthy countries have an abundance of dwellings, non-residential premises and infrastructure which means that construction growth will lag slightly behind economic growth. In countries where the construction sector overheated and collapsed after the financial crisis, construction will outpace economic growth in the next few years.
The CEE Countries need a lot of new construction both buildings and civil engineering. The realisation of their needs requires stronger economic growth than in the rest of Europe which makes construction growth possible. In Southern Europe construction was on an unsustainably high level before the financial crisis (17% of GDP) but fell to 10% in 2013. The Nordic construction output had grown moderately before the financial crisis and the construction slump was fairly short-lived and cyclical. Nordic construction has been growing rapidly over the last few years. Economic forecasts for it are also better than the European average. The fluctuations in construction in Western Europe have also been quite small. Brexit will weaken Western European economic and construction growth to slightly below the European average. Economic growth in total Europe has launched growth of construction, but the only slightly faster growth increases construction as a share of GDP slowly, which means that the share could reach 10% in 2025.