The autumn business surveys in both the construction and HVAC sectors are deservedly causing concern. Growth in new construction and especially renovation construction has not started as expected. The building services sector business survey also speaks harshly about the fragmented market situation in the sector. The decline in new production continues, but expectations have improved slightly since the spring. The growth potential of renovation construction is being weakened by the government's failure to provide support to the cyclically sensitive sector.
The autumn business surveys in both the construction and HVAC sectors are deservedly causing concern. Growth in new construction and especially renovation construction has not started as expected. The building services sector business survey also speaks harshly about the fragmented market situation in the sector. The decline in new production continues, but expectations have improved slightly since the spring. The growth potential of renovation construction is being weakened by the government's failure to provide support to the cyclically sensitive sector.
The Ministry of Finance estimates in its autumn budget proposal that housing construction is expected to return to slight growth this year. According to the Ministry of Finance's estimate, a clearer recovery is expected in the following years. The results of the economic surveys conducted by the Finnish Building Technology Association and the Finnish Construction Industry Federation do not support the Ministry of Finance's optimistic assessment.
According to RT's autumn economic outlook, this year's growth in the construction sector will remain at 0,8 percent, and next year's growth is expected to remain at around 3,5 percent. Due to post-cyclicality, a stronger recovery in the construction sector can be expected in 2027 at the earliest. This estimate differs significantly from the Ministry of Finance's forecast. The total number of housing starts is expected to remain at a very low level this year, similar to the previous two years, at less than 18,000 housing units. Next year, the number of starts is forecast to be 20,000 housing units.
In order to secure the growth of the construction sector, the government's budget proposal includes a fixed-term 10 percent investment subsidy, which would encourage housing companies, municipalities and other property owners to launch already planned renovation projects. The subsidy would launch investments, increase the number of jobs available and ultimately return euros to the state in taxes and tax-like payments. The subsidy would curb the growth of renovation debt, accelerate energy efficiency and support small and medium-sized enterprises in particular, for which renovation construction is a key area of activity. The situation in renovation construction and project decision-making can also be facilitated by extending the household deduction to housing companies.
The growth of renovation construction requires, in addition to government support measures, decision-making capacity from housing companies. Housing renovations are slowed down by the difficulty of many housing companies to obtain loans, especially in quiet market areas. Therefore, planning and timely decision-making by housing companies are more important than ever. Now is the right time for renovation construction, as there is still labor available. When the economy brightens, there will be a renovation rush and finding experts will become even more difficult.
The annual need for renovation of residential buildings is approximately eight billion euros. Incentives must be created for property owners and housing companies to carry out renovation construction so that the renovation debt can be closed and at the same time the energy efficiency of residential buildings in particular can be developed. It is important that decision-making directs resources in a direction that will trigger growth and investments.
Zero economic growth and weak consumer confidence have prevented the long-awaited recovery in construction. Unfortunately, waiting will not make the repair debt disappear, energy efficiency improve, and national wealth be maintained. In times like these, when the bad news seems to outweigh the good, concrete actions and a vision are needed that create faith in the future.
Learn more to the economic review of the building services industry.
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