Construction is shrinking this year for the fourth year in a row. The total amount of construction will decrease by just under a percent. In house construction, starts turn to growth, but infrastructure construction remains in the red. If economic growth strengthens and employment increases, construction is expected to grow by 2–3 percent next year.
The current year is still difficult for the construction industry. The number of starting units for new construction is at its lowest point, and housing production in particular continues to decrease. Renovation construction has supported fussy house building.
"Even in the previous spring, we have expected growth for the next year, but the outlook has always weakened over the course of the year and we have been met with a new downturn", Chief Economist of Rakennusteollisuus RT Sami Pakarinen describes.
"This time, we base our view on the fact that in many areas, construction has fallen so low that there is practically only one direction, that is, up. There are positive signs to be seen in the general economic development, and the willingness to invest in industry, for example, is picking up. There are large individual projects in sight, although for now there is no widespread recovery," Pakarinen says.
Residential construction starts will continue to decrease this year as privately financed housing production shrinks. Consumer trade has been tight in recent years, but private funds have acquired apartments for rental use and kept housing construction going along with government-subsidized production.
The revival of housing sales requires a strengthening of consumer confidence, which has already been seen in recent months. This would also have a positive effect on the construction of single-family houses, which is plowing really deep. This year, it is believed that the construction of only 5 single-family houses will start, while in previous years the number was at best more than triple.
"This year, we anticipate a total of 23 apartments to start, while VTT's estimated need based on population development would be around 500. If the need constantly exceeds the supply, apartment prices and rents will rise, especially in growth centers. The housing situation should not be allowed to go into crisis, but the public sector must do its part to ensure the conditions for affordable housing through, for example, functional zoning", Chairman of the Board of Rakennusteollisuus RT, Deputy CEO of YIT Oyj Tero Kiviniemi toteaa.
Urbanization will significantly affect future construction needs in the next few years. As a counterweight to the construction of growth centers, the construction industry is calling for prioritization of the road network at the level of the entire country, so that the transportation of raw materials and connections to export ports remain in order.
"By investing in infrastructure, we aim to improve the conditions for exporting goods and to increase Finland's competitiveness. Catching up on the state's road infrastructure repair debt, which has already grown to 2,4 billion euros, is particularly profitable in such a low economic situation, when the cost level is low", CEO of Rakennusteollisuus RT Tarmo Pipatti sends greetings to the politicians preparing for the elections.
Construction statistics interrupted
The lack of statistical data currently makes it difficult to forecast trends in the construction industry.
The most recent data regarding house construction only reaches October 2014. Statistics Finland renewed its construction statistics at the end of last year, but problems with the information technology systems of the Population Register Center have prevented the transition to the new practice, and the statistics have had to be suspended.
Last year's official statistics are completely missing the beginning data for the end of the year, but the Construction Industry has tried to take them into account in its own economic cycle review. Deficiencies in statistics affect the assessment of the total amount of construction and the number of house construction starts.
For more information:
Chairman of Rakennusteollisuus RT, Vice President of YIT Oyj Tero Kiviniemi, tel. 040 519 0112
CEO of RT, Tarmo Pipatti, tel. 040 506 5021
RT's Chief Economist Sami Pakarinen, tel. 050 343 4337 RT's Communications Director Merja Vuoripuro, tel. 040 587 2642
Materials:
The complete economic review and the press release can also be found on RT's website www.rakennusteollisuus.fi/suhdanteet
You can download key business cycle graphs and other up-to-date graphs from the Construction industry's pattern bank www.rakennusteollisuus.fi/keskeiset-suhdannekuvaajat