Finland’s construction sector faces continued stagnation in early 2024, industry group warns

Finland’s construction industry will not see growth in early 2024, according to a new economic outlook by Rakennusteollisuus (RT), the sector’s employer association. The report, published Tuesday, states that expected growth in construction output failed to materialise last year and in early 2024, with recent conflicts in the Middle East further reducing prospects for a turnaround.

Housing starts fell to around 16,200 units last year, marking several consecutive years below the 20,000 threshold. The association estimates long-term demand at 31,000–35,000 new homes annually. RT forecasts housing starts will drop to 15,000 this year and remain at historically low levels in 2025.

Jouni Vihmo, RT’s chief economist, noted that prices for existing homes continue to decline while new-build premiums rise. “Households remain exceptionally cautious,” he said, citing concerns over unemployment risk, falling housing equity, potential interest rate hikes, and financing constraints. Investor returns in the rental market have also failed to meet expectations.

High construction costs and tighter financing persist, keeping residential development economically unviable. Non-residential building has seen declines for years, though data centres, green transition projects, and defence infrastructure investments offer some growth potential. Renovation activity, weak throughout the decade, showed slight improvement late last year.