Construction of new homes across Europe is projected to decline in 2025, reaching 1.46 million units, a decrease from the 1.55 million completed in 2024. Forecasts from EuroOCONSTRUCT, a research group affiliated with the Ifo Institute in Munich, anticipate only a modest recovery to 1.51 million units in 2026.
Several factors have been impacting construction activity in numerous countries, according to Ludwig Dorffmeister, a construction expert at the Ifo Institute. These include elevated interest rates, reduced purchasing power, significantly increased building costs and shifts in new construction subsidies or tax increases.
Germany is expected to see a particularly sharp decrease, with completions falling to 205,000 units in 2025 – a 19 percent drop – and further declining to 185,000 units in 2026, representing a 10 percent decrease. While current market conditions have shown slight improvement regarding financing, real wages, property prices and achievable rents, a return to higher completion figures is not anticipated until 2027, reaching approximately 195,000 units. Any stimulus from accelerated construction initiatives is expected to have a limited impact.
Across Europe, positive signals are primarily confined to a limited number of nations, such as the Czech Republic (+27 percent), Sweden (+21 percent) and Hungary (+20 percent). However, ten countries are still experiencing a decline in completed housing, including France (-14 percent) and the United Kingdom (-10 percent).
When assessed relative to population size, only Ireland, Poland and Switzerland are projected to complete more than five dwellings per 1,000 inhabitants in 2025. Conversely, countries such as France boast 3.7 dwellings per 1,000 inhabitants, while Germany, the United Kingdom and Spain are constructing just over two dwellings per 1,000. Italy reports the lowest figures, completing just 1.6 dwellings per 1,000 residents.