Uncertainty and rising prices of raw materials slow down construction. The construction is supported so far by the large number of starts at the end of last year. In terms of future projects, companies' bidding activities are very difficult. The building industry hopes for flexibility and cooperation between customers and builders in its economic review of Southwest Finland.
Housing construction is predicted to slow down, but will still remain at a good level compared to history. The current year is supported by last year's strong start pace of housing construction and the acceleration of business premises construction despite the uncertainty.
Uncertainty and restrictions are eating away at Finland's growth
The war in Ukraine increases uncertainty in the whole of Europe and also lowers growth forecasts for the Finnish economy. So far, no major investment decisions have been canceled, at least based on public discussion. According to Statistics Finland, consumers' home purchase intentions have also remained high.
The Finnish economy is predicted to continue growing this year and next. The volume of construction will be maintained well into the end of the year by last year's large number of starts. However, as the war lasts or expands, investment decisions become more difficult. Growing uncertainty and rapidly rising construction costs weaken the willingness to invest and spend.
"The projects started last year are carrying construction. Future investments are associated with growing uncertainty. Companies' bidding activities are currently very difficult, as it is almost impossible to predict the development of costs. It is almost impossible to solve the profitability equation for future projects", says the chief economist of Rakennusteollisuus RT ry Jouni Vihmo.
The rise in the prices of construction raw materials was already exceptionally strong last year. The war in Ukraine has weakened the availability of building materials and further increased their prices.
"The availability of construction materials and the unpredictability of costs are significant challenges that can cause delays in schedules and lead to incomplete deliveries. Loss of income can hardly be avoided. As the war drags on, materials have to be replaced with substitutes, and new procurement channels have to be looked for even further," says Vihmo.
The increase in construction costs is a common problem for clients and builders
"Due to the challenges described above, tendering is currently very difficult. However, from the crises of previous decades, we have learned the importance of cooperation: genuine cooperation between customers and suppliers as well as between employers and employees is now required. It's the only way out of this difficult situation. At the moment, the problems seem to pile up on the necks of the construction companies, but in reality this is a common problem for all of us", concludes the Regional Manager of the Building Construction Industry Katja Suovo.
- Business cycle review 12.5.2022
Additional information
Katja Suovo
Regional manager, Talonrakennusteollisuus ry, Southwest Finland and Satakunta
Tel. 041 536 1300
katja.suovo(@)rakennusteollisuus.fi