Moderate Recovery of the European Construction Market

After two years of decline, including a particularly difficult 2024 (–2.1%), the construction sector in Europe (EC-19 zone) is beginning a gradual recovery:

EUROCONSTRUCT forecasts predict:

• +0.3% in 2025 (Euroconstruct Summary Report, p.42)
• +2.0% in 2026 (Euroconstruct Summary Report, p.42)

This trend is driven by lower interest rates, an improving macroeconomic outlook, and supportive public policies.

Sector Developments (according to EUROCONSTRUCT)

Residential (~48% of the construction market):

• Still in decline in 2025 (–1.1%), but recovery expected in 2026 (+1.8%) followed by an acceleration in 2027 (+2.8%).
• This sector is expected to be the main driver of the turnaround from 2026 onward, supported by central banks’ interest rate cuts.
• New construction: +0.3% in 2025
• Renovation: –2.0% in 2025

Non-residential (~30.2% of the construction market):

• Moderate growth (+1.8% per year), driven by renovation and new environmental standards.
• Outlook weighed down by fragile public finances, weak domestic demand, and budget cuts in several countries (e.g., Austria and Italy).

Civil Engineering (~21.5% of the construction market):

• The most dynamic segment: +2.5% in 2025 and +2.4% in 2026

Strong National Contrasts

• Poland: Growth leader with +16.5% across the entire construction market, supported by strong economic recovery, significant public investments financed by EU funds, and a large-scale thermal renovation program (788,000 housing units).
• Germany: Stagnant market (–2.1% in 2025, +0.3% in 2026), weighed down by soaring production costs, energy requirements, subsidy cuts, rent regulation, a discouraging tax regime, falling purchasing power, and labour shortages.

Luis Ovelha
Head of Sales & Marketing

Source: EUROCONSTRUCT https://www.euroconstruct.org/reports