Construction market

Sweden

Sweden continues to be challenged by high inflation which has a negative effect on both consumption and investments while a strong labor market is resistant. There are some signs that inflation may be deflating and thereby expectations that Sweden’s central bank will be able to begin lowering the policy rate during the first half of 2024. Sweden’s GNP is expected to contract by almost one percent in 2023 and then increase by the same amount in 2024. A broad decline in housing building construction is expected in 2023, especially in apartment building production. It is particularly in new production where high costs, rising interest rates and falling sales prices for homes have diminished investment appetites. The deteriorating financial conditions have also had a negative impact on other building construction in both the private and public sectors. Overall a broad decline in total building construction investment is expected in 2023 and stay on the same level in 2024. After investments in civil engineering remained on the same level last year, this year they are expected to contract slightly. Some investments might be postponed due to the current high costs. It appears investments in civil engineering will increase in 2024. In a longer perspective, green investments and an expanded national plan for transportation infrastructure will create a good platform for development.

Norway

The Norwegian economy is resilient despite high interest rates, inflation and global financial unrest. The forecasts for GNP development have been adjusted upward and are now at around one percent annual growth in 2023 and 2024. Strong household consumption has come as a surprise and Norwegian companies have shown positive development at the beginning of the year. Norway’s central bank is expected to continue to raise the policy interest in 2023. New housing production is expected to contract dramatically, especially in apartment buildings. The decline will most likely continue in 2024 but to a lesser extent. It appears other building construction for the private sector will grow in 2023 supported by a growth spurt in industry. Even public sector construction looks like it can grow in 2023 as an aftereffect of dropping dramatically in 2022. All in all total building construction investments are expected to be stable in 2023 and show some growth in 2024. Civil engineering is expected to grow in both 2023 and 2024.

Finland

The Finnish GNP is expected to have zero growth in 2023 as a result of rising interest rates and diminishing external demand, which draws down export volumes. The labor market is, meanwhile, holding up rather well which provides some fuel to household consumption and cushions the fall in sales prices on the housing market. The rapidly rising cost of interest rates will, however, subdue financial activity. A broad decline in total building construction is expected in 2023 with the most negative development in the housing sector. Public investments in other building construction are also expected to contract but the most drastic drop is expected in retail space and offices. Building construction volumes are expected to develop weakly in 2024 but there might be an upturn in public premise construction. Civil engineering is expected to develop sideways in 2023 followed by a slight upswing in 2024.

Housing

	2023	2024	2025
Sweden
Norway
Finland

Forecast for production-started housing investments, new production and renovations
Source: Navet

Other building construction

	2023	2024	2025
Sweden
Norway
Finland

Forecast for production-started other building construction investments, new production and renovations (Industry, office/retail etc. and public premises)
Source: Navet

Civil engineering

	2023	2024	2025
Sweden
Norway
Finland

Forecast for civil engineering investments
Source: Navet

	Worse forecast compared to the previous quarterly report
	Better forecast compared to the previous quarterly report
	Same forecast compared to the previous quarterly report