The viz was updated on 31 August 2026. → The latest data of Bulgaria are very promising, there was a correction in Türkiye.
In Serbia there is lasting optimism, but in Croatia there has been some shrinkage lately. These countries experienced massive permit expansions between 2014 and 2022 and they have remained at around their peak for quite a while. Serbia has had around 7 million permitted m2 (residential and non-residential combined) for over four years and Croatia had been above 4 million for three years since 2023. It is no longer true due to the worsening non-residential permit figures. Slovenia remained below its 2022 peak despite some positive correction in H1 2026. Expansion continued in Bulgaria, the 9 million m2 (record of the last 15 years) has been surpassed. Recovery in Romania and in Hungary paused in Q2 because of the drop of non-residential permits.
You may use the dropdown in the viz for selecting either the residential or the non-residential submarket, or both.
In the full visualization, not only permit but completion data can be followed (where available).Just click on the Country-by-country sheet.
Despite the slight correction in residential segment, figures in Türkiye are still extreme. More than 1.2 million dwellings obtained construction permit in the last 4 quarters. (From Q2 2025 on, permits issued by authorities other than the municipalities are also published by TUIK. So the scope is bigger, the results show the full picture. Click through the below viz for understanding the size and the impact of this revision.) Q1 2026 has been the best quarter in Ukraine since the beginning of the war. This was the first quarter, however, when residential was not able to grow. (Q2 figures will be published on 14 September.) Russia is relatively stable when it comes to building completion. There is slight uptrend in non-residential and a downtrend in residential.
This visual about the significance of the permit revision in Türkiye was compiled back in September 2025.
Written by Prof. Dr. Ali Türel and Prof. Dr. Leyla Alkan Gökler, EECFA Türkiye
In H1 2026 Türkiye saw construction costs go up, which is biting into private housebuilders’ profit margins, while house price growth decelerated in real terms. Permit numbers grew in the first half of the year thanks to the public housing schemes of the government. However, Q2 2026 was already weaker in building permits and construction production, so it remains to be seen whether these public programs will keep residential construction strong.
Residential buildings and non-residential development in Ankara – Photo by Prof. Dr. Leyla Alkan Gökler
H1 2026 statistics: construction costs, house prices, building permits
According to the statistics gathered and published by the Turkish Statistical Institute (TurkStat), a comparison of the monthly rates of change in the Consumer Price Index (CPI) and the Construction Cost Index (CCI) for residential buildings shows that construction costs increased at a slower pace than inflation in 2025. In January 2026, however, CCI recorded a considerable increase, while during the remainder of the first half of the year it generally continued to rise at a higher pace than inflation.
A comparison of the monthly rates of change in the Consumer Price Index (CPI) with the House Price Index (HPI) for 2026, published by the Central Bank of Türkiye, indicates that house prices also increased at a slower rate than inflation through June. Looking at the cumulative changes in these three indicators during H1 2026, CPI added 17.76% in June compared to December 2025, while HPI rose by 13.20% and CCI by 20.07%. These figures indicate that house prices grew at a slower pace than inflation during H1 2026, implying a decline in house prices in real terms. In particular, following the sharp increase in the building construction cost index in January 2026 over the rate of increase in house prices, this would inevitably cause a significant decline in profit margins for housing producers.
The number of dwelling units granted building permits reached 513,731 in H1 2026, indicating that construction permits were issued for 35,071 more dwelling units than in H1 2025. In terms of completed dwellings, occupancy permits were issued for 306,687 residential units during H1 2026, representing an increase of 28,990 units compared with the same period of 2025.
New housing developments at the Fringe of Ankara – Photo by Prof. Dr. Ali Türel
Public housing programs
Over the past three years the number of dwelling units granted building permits posted a massive growth, exceeding one million units in 2025, one of the main reasons being the rapid housing reconstruction program undertaken or financed by the government following the major earthquakes of 2023. By the end of 2025, the construction of as many as 455,000 urban and rural housing units, the majority of the post-earthquake housing units to be built, had been completed and delivered to legal beneficiaries.
The Housing Development Administration (HDA, the central government institution) has also been preparing a new social housing program with the intention of providing quake-resistant, low-cost housing with affordable prices, comprising 500,000 housing units since October 2025. Therefore, despite rising construction costs, housing construction continues at a relatively strong pace, with publicly developed housing accounting for a substantial share of building permits. Rise in the building construction cost index at a higher rate can also be related to the effects of the new social housing program of the HDA, and the remaining works of the reconstruction program of earthquake-damaged housing.
High-rise housing developments in Ankara – Photo by Prof. Dr. Leyla Alkan Gökler
Construction output
Despite the increase in building permits during H1 2026, this momentum has struggled to translate into actual construction output. Calendar-adjusted Construction Production Index declined by 3.1% year-on-year in May and by 6% in June. These falls may be linked to the nearing completion of earthquake reconstructions, as well as the 9.5% fall in housing permits in Q2 2026, although completions have continued to grow since Q2 2025, most likely under the effects of the completed reconstruction of the remaining earthquake-damaged housing.
With house price increases remaining below the rise in construction costs, the slowdown in construction output suggests that increasing cost pressures and narrowing profit margins are constraining the pace of the private sector’s housebuilding activity. Housing demand is also negatively affected by high interest rates as mortgage credits could be used in only 22% of housing transactions in 2026.
Residential market forecast for Türkiye up to 2028 is available in the EECFA Forecast Report Türkiye. For sample report or orders, contact us.
Traditional residential settlements in Ankara – Photo by Prof. Dr. Leyla Alkan Gökler
There was no construction start indicator in Romania, so we have created an estimation for it.
This poster is a summary of our monthly findings. It shows how the total value of started construction works have changed over the same period last year. Besides, it presents which segments have the biggest start value in the current year. We call this indicator Project-Start. And they are computed every month for 18 construction segments by aggregating data of construction projects. The projects are from the iBuild database and ELTINGA and Buildecon found the way of creating indicators out of them.
If you need short-term foresight, you will like it.
Brief comment from Janos Gaspar, head of Buildecon:
Project-Start is still much weaker in building construction than this time last year. Within building construction, the multi-unit residential submarket experienced the bigger drop, the total value of started works halved from a year ago. The drop in non-residential is less harsh, but still significant. And it is driven by the declining Project-Start in the publicly financed segments (education, health, other non-residential). Thanks mostly to the works commenced on A8 Motorway and the Bucharest-Giurgiu railway line, civil engineering is still strong, despite the double digit drop.
We have renamed our indicators for the sake of easier understanding; from now on we refer to the total value of started/completed construction works as Project-Start/Completion. In the EBI Construction Activity Visualization and Report we are also switching to the terms of Project-Start/Completion instead of the previously used Activity-Start/Completion.
Every month this poster will be available here on our blog. If your interest is deeper, we have the EBI data visualization (with indicators for all the 18 segments of the construction market), updated monthly and we have the EBI Construction Activity Report Romania (with data and explanations), published quarterly in English and in Romanian. All these are packed into a yearly subscription. For the specifics, please contact us.
Written by Tünde Tancsics – ELTINGA, EECFA Research
Similarly to every summer, ELTINGA (EECFA Research) has now examined how the European Commission sees the EECFA countries. Here is the summary of the major changes in economic prospects between the Autumn 2025 and Spring 2026 forecasts.
The economic outlook has deteriorated across almost all countries in the region compared to Autumn 2025, although growth projections remain positive. Serbia, Romania and Slovenia experienced the most significant downward revisions (-0.4 percentage points), while Bulgaria and Croatia underwent only slight adjustments (-0.05 to -0.1 percentage points). Russia was the only country whose projected growth marginally rose. Growth expectations for the EU and the Euro Area also fell moderately, reflecting a general weakening of economic momentum across the region.
In 2026-2027, average GDP growth is forecast to be positive in all countries, albeit to varying degrees. Türkiye is expected to lead the group with a growth of 3.5%, followed closely by Serbia (+3.35%). Meanwhile, Russia and Romania are forecast to have the smallest expansion (+1.2%). Croatia (+2.6%), Bulgaria (+2.35%) and Slovenia (+2.1%) are projected to perform in the middle of the range. The Euroconstruct member Hungary is predicted to grow by 1.95%, which is above the EU average. Despite the general downward revisions, most of the countries in the region are expected to do better than the EU (1.25%) and all of them will likely surpass the Euro Area (1.05%), maintaining the pattern of stronger growth dynamics in East and Southeast Europe.
Since the Autumn 2025 forecast, the projected growth rate of gross fixed capital formation in the region for 2026-2027 has been revised in both directions. The steepest cuts were seen in Bulgaria, in Serbia and in Romania where projected GFCF growth dropped by 0.8-1.75 percentage points. Meanwhile, Hungary, Slovenia, the EU, the Euro Area, and Russia recorded more moderate downward adjustments, while Türkiye and Croatia saw upward revisions. Serbia is still projected to lead in GFCF growth at 5.15%, followed by Türkiye (4.2%) and Romania (3.2%). Bulgaria (1.25%) and Russia (0.35%) remain at the lower end of the spectrum. The EU (2.1%) and the Euro Area (1.75%) continue to lag behind most countries in the region.
Growth expectations for gross fixed capital formation in construction have been modified across countries where data is available, in both positive and negative directions. The most notable upward revisions occurred in Slovenia where projected construction investment growth increased by 1.55 percentage points to 4.9% (the highest in the group). Romania ranked second in terms of expected growth with 4.85%. Compared to Autumn 2025, Croatia saw a more significant upward revision in its projected growth rate (1 percentage point); the third largest increase in gross fixed capital formation in construction is expected there (3.05%). By contrast, Hungary and Bulgaria experienced the biggest downward revisions, falling to 2.95% and 1.6%, respectively. In the broader European context, construction investment is projected to rise only modestly to 1.85% in the EU and 1.6% in the Euro Area, remaining below most national forecasts in the region.
The Commission’s view on expected construction investment is quite different from ours. Partly it is because we examine the sector from the bottom. For each segment we come up with an individual story and this is how the total construction market is formed. Our latest forecast is in the 2026 Summer EECFA Construction Forecast Reports. Sample report and order
EECFA’s 2026 Summer construction forecast up to 2028 was released on 22 June. Sample report can be viewed at eecfa.com. To obtain the new reports, please contact us
Southeast European construction markets up to 2028
Bulgaria stepped into this year as the 21st member state of the eurozone in the middle of an evolving political turbulence that inevitably impacted the construction sector, most notably, projects that rely on public funding. Nevertheless, according to Yasen Georgiev at Economic Policy Institute (EPI), EECFA’s Bulgarian member institute, Bulgaria’s total construction output is anticipated to increase by approximately 2% on average in the forecast period of 2026-2028. He also notes that “Last year Bulgaria’s construction sector excelled with a strong performance, largely thanks to the residential and non-residential submarkets which fared better than previously predicted. In 2026-2028, however, the country’s total construction output could see a heterogeneous performance.”
Michael Glazer (SEE Regional Advisors) and Tatjana Halapija (Nada Projekt), EECFA’s members for Croatia, point to funding from the EU’s Military Mobility Package (MMP) as a promising source of finance for a wide variety of Croatian construction projects. Transportation ones, both straightforwardly military and dual use, are obvious contenders, so the availability of MMP money should lift output in those civil engineering segments. MMP will likely boost some non-residential segments, too, since it can finance, e.g., factories and logistics centers (perhaps even flight schools?) that have a military or dual-use purpose. This will help sustain total construction output despite rapidly declining levels of finance under the EU’s post-2022-earthquake rebuilding programs and RRF. In non-residential generally, while some developments will affect all segments, specific factors will ensure that output growth varies greatly from segment to segment. The picture for energy construction is also confused, with solid, well-known technologies competing with much-hyped, as-yet-unproven, “hi-tech” alternatives. Residential is buffeted by the conflicting influences of rising prices, declining GDP growth and interventions by the central bank and the government.
Dr. Sebastian Sipos-Gug, EECFA’s Romanian researcher at Ebuild, notes that Romania’s construction market is still in a tight spot. “Growth potential is limited with global and national factors conspiring against it. Recent economic forecasts are more pessimistic; 2026 might see a stagnant GDP, declining real wages and the highest inflation in the EU. This is coupled with the looming specter of national deficit causing high taxation and austerity measures: lower public spending, and wage and hiring freezes for public employees. Not to mention that construction costs, which started evening out in 2025 after the 2022 shock, are now again on the rise due to climbing energy prices and labor costs. The saving grace of construction is the EU programs funding infrastructure projects. Yet, with the NRRP running out in mid-2026, and other programs having an inconsistent performance, the boost they can provide is limited. Adding to all this is a political crisis that could lead to a government change at a critical moment (the end of NRRP absorption, projects phased into other funding sources). But the silver lining: most of these issues should be transitory. By 2028 Romania’s construction might return to growth on the back of improved economic indicators, inflation levels within the target range, a more efficient energy sector, and hopefully, a more stable political situation.”
“Serbia’s overall construction output is still consolidating in 2026 led by the correction in civil engineering, while buildings continue to grow in this forecast” – according to Dejan Krajinović, EECFA’s Serbian researcher at Beobuild. He adds that the performance in the residential submarket remains stable and is predicted to continue to grow with moderate growth rates. Non-residential, on the other hand, is booming, driven by massive investments related to the EXPO 2027, with another year of double-digit growth expected in 2026. Main segments benefiting from ongoing developments are office, commercial and hotel, but health-related construction is also breaking records in 2026. The consolidation in civil engineering is anticipated to end in 2027, with new growth on the horizon in 2028 and onwards. The large-scale infrastructure projects in the pipeline should launch a next big growth cycle in overall outputs. However, the war in the Middle East is already pushing construction costs up and the economic uncertainty and fragmentation are still risks that continue to linger in the coming period.”
“Slovenia’s construction sector’s output was holding steady at just under €6bn in 2024 and 2025 but is set to edge higher in the forecast period, supported mainly by public spending” – says Dr. Aleš Pustovrh at Bogatin, EECFA Slovenia. “Growth is increasingly uneven: residential construction remains constrained by limited supply and rising costs despite strong demand, while private non-residential segments such as offices, retail and industry face cautious investors and only modest expansion. By contrast, publicly financed segments, notably education, health and civil engineering renovation, are providing stability, with infrastructure upgrades, railway investment and energy-transition projects sustaining activity. Transport and utility constructions are shifting from large expansions to maintenance and modernisation, and investment in electricity networks and pipelines is set to rise further due to the energy transition. Overall, the sector is moving into a more stable but slower phase where public policy and infrastructure spending play a decisive role in keeping output on track – as long as public financing remains available.”
Eastern European construction markets up to 2028
According to Andrey Vakulenko at Macon, EECFA’s Russian research institute, the downward trend in Russia’s construction market, which began in 2025, is likely to continue and intensify in 2026–2027. The main reason behind is the combination of a decelerating economy and a prolonged period of high interest rates, which negatively impacts demand, limits the availability of financing and restrains investment activity. Residential construction is experiencing the strongest pressure as the market struggles to find a new balance amid reduced mortgage availability, declining demand and decrease in new construction. Most non-residential segments may also show negative dynamics in the coming years impacted by the slowdown in consumption volumes and business activity, weak household income growth and changes in the direction and scope of government funding in certain segments. Civil engineering will likely stay the most resilient subsector due to the implementation of major transport and energy projects. The planned acceleration of infrastructure construction, the expected growth in the residential submarket and the easing of monetary policy are the conditions for the construction market to return to a growth trajectory in 2028.
“In Türkiye, state involvement in housing development has grown in recent years” – say Prof. Ali Türel and Prof. Leyla Alkan Gökler, EECFA’s Turkish researchers. “Policies to curb inflation have depressed households’ disposable income, creating a serious housing affordability issue for both ownership and renting as home prices and rents have spiked. As moderate-to lower-income households have found it increasingly difficult to accumulate sufficient equity for home purchases, the government has intervened. It launched a large number of residential projects for dwellings that can be bought on affordable terms by households not owning a house in Türkiye. Dwellings will be built by the Housing Development Administration (HDA), the key state actor in housing production in Türkiye. Since HDA has also been involved in rebuilding the about 550,000 dwellings damaged in the February 2023 quake, the share of housing built by the public sector has greatly risen in recent years, while the share of the private sector has been declining from its former share of about 90%. Our latest forecast indicates that total construction output in Türkiye may reach nearly 8 trillion TL (nearly EUR 180 billion) in 2028, at 2025 prices.”
“Ukraine’s construction market exhibited high resilience in 2025 despite the ongoing war and challenging security conditions. While it is recovering and it nominally returned to pre-war levels last year, it was still 40% below the 2021 output at comparable prices.” – notes Professor Sergii Zapototskyi at Uvecon, EECFA Ukraine. “Key growth drivers were commercial, industrial, warehouse, and logistics developments, an uptick in residential construction in relatively safe regions, and large-scale projects aimed to restore public and transport infrastructure. In the coming years, the construction market is expected to continue to grow, supported by post-war reconstruction needs, government housing support programs, and an increase in international funding for Ukraine’s recovery. The greatest growth potential will remain in residential, commercial, as well as industrial and warehousing construction. At the same time, the future performance of the market will largely depend on the security situation, the availability of investment resources, the ability to address labour shortages, and the effectiveness of government reconstruction policies.”
Written by Michael Glazer (SEE Regional Advisors) and Tatjana Halapija (Nada Projekt), EECFA’s Croatian members
The Croatian economy, including its construction sector, is threatened with serious damage this summer. For now, the pain has not been intense and the danger perceived only vaguely. This could change massively for the worse, though, both as to the actual injury and the perception of danger, by the middle of June and even as early as the end of May. Many factors are at work, but there is only one cause: the US-Israeli-Iran war.
Croatian tourism Summer 2026? – Split, Croatia. Photo by Tatjana Halapija
The cause
Ship traffic through the Strait of Hormuz, which links the Persian Gulf with the Arabian Sea and so with the rest of the world, has fallen 97%. This is twice as much as in any other oil crisis. This means that crude oil and liquified natural gas (LNG) are no longer being transported in anything resembling normal quantities. Nor are sulfur (an important chemical industry feedstock) or helium (used mostly in cooling, e.g., of MRI scanners), which are produced primarily as byproducts of oil and gas extraction and of which Gulf countries are major suppliers. The same holds true for fertilizer, ethanol, graphite, aluminum, iron and steel pellets and glycol, of which, again, Gulf countries manufacture a large portion of global production. (Pistachio nuts, too, but the effect on the world economy is likely to be less pronounced.) Worse, a significant amount of Gulf petroleum, gas and chemical production capacity has been destroyed or damaged (e.g., up to 17% of Qatar’s LNG production capacity) or will be if the war continues (shut downs often damage oil and gas wells and pipelines).
Although Asia is already suffering severely, with some countries mandating four-day work weeks to save energy, Europe and the United States have been spared the worst effects of these developments so far. That is about to change as supplies of oil, LNG and, even more important in the immediate and short terms, their refined products such as jet fuel and diesel become tight after ships in transit unload and private and national reserves are depleted.
Effects on Croatia: tourism, economy and construction
For Croatia, this will likely alter the sources, type, number and ability to spend of the tourists on which the country’s economy in large part depends .Tourists from distant countries will be deterred from flying to Croatia as the price of tickets and the number of canceled flights, already in the tens of thousands, rapidly rise because of enormous increases in jet fuel prices (doubling in Europe since February 28, 2026). Some in Europe may decide to drive instead, but they and tourists that normally drive to Croatia will find that fuel is expensive. Croatia’s languid approach to upgrading and extending its railways means that rail will for the most part not be a realistic alternative, and anyway rail ticket prices will rise, too, because of higher electricity and diesel prices. The upshot for Croatia is that many tourists may decide to completely alter their holiday plans and vacation nearer to home than Croatia, while those that do come will probably not stay as long and have less money to spend than in the past. This would significantly reduce the income Croatia derives from tourism. Croatia’s reputation for high costs, which higher agricultural product prices due to fertilizer shortages will worsen, will likely exacerbate the problem.
The implications for the Croatian construction industry are that hospitality-facility construction will likely fall in the near term, as owners, operators and investors wait to see just how bad and how long the economic effects of the war will be. The wait could be a long one, given that analysts forecast that these effects will last for at least eighteen months and perhaps considerably longer, particularly if the industrial and storage facilities of belligerents and their allies are targeted in a new outbreak of hostilities.
Damage to Croatia’s tourism sector will of course flow through to the country’s other economic sectors, given how important tourism is to Croatia’s economy. But these sectors will likely be hit directly as well. Further stagnation in countries to which Croatia exports non-tourism goods and services is to be expected because of the rise in the costs of energy and raw and intermediate materials, especially but not only plastics and others made from petroleum. This will put further strain on the Croatian economy.
Aggravating this will be a likely rise in the prices of at least some construction materials. Three examples among many are rebar and cement, both of which are energy intensive to produce, and concrete, which uses petrochemical-based additives. And of course transportation costs will rise. One, rather dim, bright spot is that weak economies in countries to which Croatian construction workers have emigrated could encourage them to return home, helping to keep construction costs down. But taken all in all, the growth rate in output of Croatia’s non-hospitality construction sectors is likely to decline and in some cases to go negative. Even government construction projects may be at risk, because payment of energy, agricultural and other subsidies will deplete the government’s cash reserves and reduced economic activity will diminish its tax take.
The future
The question now is not whether the US-Israeli-Iran war will have significant negative effects on construction in Croatia but rather just how bad those effects will be. In the unlikely event that shipments through the Strait of Hormuz resume before the end of May, the effects would be minimized, although to be clear that does not mean that they would be minimal. If the Strait remains blocked beyond the end of June, consequences for Croatia could be quite substantial, since, analysts believe, European reserves of oil, gas and other important products would by then be exhausted. This would cause prices to jump sharply and continually until recession or other events reduced demand to a level that accorded with supply. If hostilities cause additional significant degradation in Gulf region infrastructure, the situation for the construction sector of Croatia, and that of many other countries, could become quite severe.
Croatian construction market forecast is available in the EECFA Forecast Report Croatia. For sample report or orders, contact us.
Written by Dejan Krajinović, Beobuild Core d.o.o., EECFA Serbia
The construction of the Belgrade Metro stands as the largest single civil engineering project on the horizon and is one of the primary drivers of future economic growth in the coming years in Serbia. For decades, public transport in Belgrade relied solely on buses, trams, and the city railway (BG Voz). Consequently, the development of a comprehensive underground system is expected to have a transformative effect on commuting patterns and travel times. It is worth noting that Belgrade remains the largest city in Europe without a functional underground metro. While the project faced delays for many years, its commencement is now certain, with preparatory works already well underway.
Two massive Belgrade metro Tunnel Boring Machines ready to be shipped from China. Photo by Beogradski metro i voz
Strategic infrastructure: impact of the Belgrade metro project
The project represents a large-scale international collaboration between China and France. The Chinese construction giant PowerChina is tasked with tunnel boring, while the renowned French company Alstom will provide the rolling stock and system management. Recent reports from China confirm that massive, custom-made Tunnel Boring Machines (TBMs) for the Belgrade Metro are ready, having undergone factory testing, and are set to be shipped to Serbia this June. Two TBMs have been constructed for the first phase of the project, specifically for Line 1. These machines will start boring from opposite ends of the line to meet halfway – a strategy that will make the construction process highly efficient and significantly faster, though it demands exceptional coordination and project management.
Line 1 of the Belgrade Metro is divided into two phases: Phase 1 spans 15km and includes 15 stations, while Phase 2 is a planned extension of an additional 6km and 5 stations. The majority of Phase 1 will be underground, with 11km consisting of deep tunnels and 2km constructed using the cut-and-cover method; only 2.1km of the line will be above ground. The city’s topography presents a significant challenge as some stations will be remarkably deep and complex, reaching up to 40m below ground level. The system will utilize driverless, autonomous vehicles and digital signaling, ensuring maximum efficiency, safety, and frequency.
The original plan envisioned the construction of Line 2 (21km with 23 stations) beginning two years after Line 1, allowing the two projects to partially overlap. However, at this stage, it is uncertain whether parallel realization will proceed as planned. The pace of other phases will depend on the progress of Phase 1 of Line 1, but financial considerations will remain the major factor affecting the speed of future development.
Nevertheless, with the start of Line 1, Belgrade has embarked on a long and ambitious journey that will define the city’s construction landscape for years to come. Estimates suggest that Line 1 could cost between EUR 3.5 and EUR 3.8 billion,meaning the project’s scale will have a tremendous impact on civil engineering output from 2027 onwards. This is a key infrastructure development aimed at boosting growth against recessionary trends in the EU and an unstable global economic environment. On the other hand, the looming dangers of energy shocks, high inflation, and global financial instability remain significant risks—not only for this project but for Serbia’s entire construction industry and the economy as a whole.
Serbian construction market forecast is available in the EECFA Forecast Report Serbia. For sample report or orders, contact us.
Written by Dr. Sebastian Sipos-Gug – Ebuild srl, EECFA Romania
Dr. Sebastian Sipos-Gug, EECFA’s Romanian analyst has looked at the trends that are worth monitoring in the residential market in Romania this year. Among them are the construction costs boomerang, the drop in wages and consumption, considerable interest in multi-family buildings, smaller homes and a greater dependence on mortgage loans.
What we saw in 2025
The construction market faced many challenges in the previous year, alongside the entire national economy. While there was a focus on civil engineering, especially when it comes to EU co-funded projects, the rest of the segments lagged behind.
In early 2025, the removal of fiscal facilities for construction employees led to the decline of their net incomes, and an increase in wage-related expenses for companies. Overall, the effect of this measure was an increase in construction costs.
Then came the multiple shocks of the liberalization of energy markets in July, and a VAT increase in August, which pushed inflation upwards significantly, with the CPI reaching 9.88% in September. In a snowball effect, this led to lower real wages and disposable income, which translated into a reduction in private consumption, and, ultimately, means lower demand for residential construction on the short and medium terms.
The optimism shown in the increased number of permits, and the useful building area in them, compared to 2024, is countered by the decline in the number of completed homes. Thus, while developers might be looking to the future, their actions in the present are lacking, also evidenced by a significant (-21%) annual decline in the value of started construction works in 2025 (source: EBI Construction Activity Report).
What to watch in 2026
Construction costs boomerang. While previously the expectation was that construction costs would gradually decline in 2026, they proved quite resilient to changes in wages, and fuel and construction materials prices remained relatively stable in the past year. Thus, late 2025 forecasts placed construction costs on a small, descending trend.
The conflict in Iran and its repercussions on oil and gas prices might throw astray these predictions. As of March 2026, oil prices were approaching 2022 levels, and, if they are not reversed rapidly, might have a similar impact on world-wide inflation, energy prices and, eventually, construction costs. A reversal, however, seems rather unlikely at the moment as the damage to energy infrastructure could take years to undo.
To make matters worse, in the past few years home prices grew slower than construction costs, reducing potential profit margins for developers. Added to the decline in real wages, it remains quite unlikely that there will be room for prices to increase alongside construction costs, again similar to 2022, further eating into builders’ financial return potential.
Decline in wages and consumption. Wage growth for 2026 was already forecasted to remain low, underperforming inflation (source NFC – National Forecasting Commission Autumn 2025 Report). Add to that the further shocks now expected from increased energy costs (due to oil and gas prices rising considering the conflict in Iran) and food costs further rising due to increased fertilizer prices, the downwards pressure on real wages is likely to be worse than forecasted, with a slower recovery.
Real wage decline will make it harder to purchase and build new homes, with a negative impact on demand for residential construction. But it could provide a boost to renovation activity, especially when it comes to energy efficiency, as switching homes becomes harder.
High interest in multi-unit residential buildings. Looking at building permits trends for the past decade, single-home buildings have remained relatively stable, while the majority of growth was due to multi-unit buildings. Under price pressure, on the backdrop of restricted wage growth and a contractionary macro-economic outlook, it remains most likely that for the near future we’ll continue to see more interest in the latter. Another connected issue is that of internal mobility, with migration from rural to urban areas in search for education and economic opportunities, increasing demand for denser residential construction.
Smaller homes. While the mean area in permits remained relatively stable between 2017 and 2025, there is a historical precedent in economic downturns leading to smaller homes being built so as to increase accessibility. Since the economic outlook for the year seems to have worsened, this could be the case again in 2026.
Increased reliance on mortgage loans. Despite the highest interest rates seen in a decade, the volume of new mortgage loans increased dramatically in 2024 and 2025. While some of this could be blamed on higher home prices, there remains a major portion that cannot be explained by price or transaction dynamics. Thus, it is quite likely that it reflects a reduced ability to buy homes without applying for a loan. This is also evidenced by the fact that the share of the population currently housed in a dwelling that was purchased with a mortgage loan grew steadily from a low of 0.5% in 2007, to 1.5% in 2024 (source: Eurostat). This could have been further boosted by the expected drop in interest rates as inflation seemed to be heading in the right direction. However, as of March 2026, this seems less likely, as the conflict in Iran would lead to another energy-led inflation event. Nonetheless, with real wages on the decline, mortgage loans will continue to be relied on for boosting home affordability.
Residential, non-residential and civil engineering forecasts up to 2027 can be found in the EECFA Romania Construction Forecast Report. Sample report and orders: https://eecfa.com/
Written by Dr Aleš Pustovrh – Bogatin, EECFA Slovenia
Slovenia’s housing market is in a curious state. Prices for both new and existing homes keep rising, yet the country still lacks a reliable measure of how far supply trails demand. Official data show steady appreciation across all major cities—Ljubljana most of all—while construction remains hampered by slow permitting, high input costs and a fragmented building industry. Politicians promise a surge in public and affordable housing but estimates of the true shortfall—whether based on household formation, demographics or unmet rental demand—are patchy and inconsistent. The average price per square metre has jumped by roughly 50% since 2021, but the structural imbalance behind this surge is harder to pin down, leaving policymakers to grapple with a problem they can only describe vaguely.
Ljubljana, Slovenia. Photo by Alexander Nadrilyanski on pexels.com
With a general election looming in March 2026, the absence of clear data creates fertile ground for confusion and political spin. The ruling coalition boasts of raising annual public‑housing investment to €100mn, pledging €1bn over the next decade. The public housing fund plans around 2,000 new units in the coming years, with perhaps 1,000 more from other public bodies. Private developers, especially in Ljubljana, are building briskly, too. Given that Slovenia completes about 5,000 homes a year, these additions ought to shift the market—at least in theory.
But the scale of need remains uncertain. In 2021 Slovenia counted 864,300 dwellings for 859,782 households—roughly one per household. Prices, though rising fast, remain below those in some neighbouring countries. The median price of used homes was €3,070 per square metre (nearly €5,000 in Ljubljana), while the average gross monthly wage was €2,500—yielding a price‑to‑income ratio lower than in many EU states. Mortgage credit is widely available and relatively cheap, with interest rates well below 4%. Outstanding housing loans rose from €8.5bn to more than €9bn in 2025, suggesting that many households are managing their residential construction investments without state support.
One of the outgoing government’s flagship measures—a clampdown on short‑term rentals—was meant to push more homes into the long‑term market. It may instead swell the ranks of empty properties: around 19% of dwellings already stand vacant. A straightforward remedy, a property tax to nudge owners to rent out unused homes, was avoided for fear of angering voters in a country where 75% of households own their homes.
The lack of solid data allows politicians to champion measures unlikely to achieve their stated aims, while sidestepping those that might work but would prove unpopular. Election season is rarely conducive to sober policymaking, but the next government will need better data—and the courage to act on it—if it hopes to make any meaningful dent in Slovenia’s housing woes.
More on Slovenia’s housing market and housing forecast up to 2027 can be found in the EECFA Slovenia Construction Forecast Report. Sample report and orders: https://eecfa.com/
EECFA released its 2025 Winter construction forecast on 12 December. Check out a sample report and place your order on eecfa.com. For discount, please contact us.
Southeast European construction markets
“Bulgaria’s total construction output is forecasted to increase by 3% on average for 2026-2027” – says Yasen Georgiev at Economic Policy Institute (EPI), EECFA’s Bulgarian research institute. He adds that this is to follow estimates for a similar performance of almost 3% in 2025. The sectoral background, however, shows, a nuanced picture – cooling of residential construction, positive news from non-residential and a robust performance of civil engineering. The latter will benefit from investments which will be backed by the absorption of EU funds through the Recovery and Resilience Plan (RRP) and classical operational programmes, both with implementation deadlines in 2026 and 2027. At the same time, Bulgaria’s economy is to expand by 2.4% on average in 2026-2027 – a period continuously shaped also by the Euro adoption on 1 January 2026.
Michael Glazer (SEE Regional Advisors) and Tatjana Halapija (Nada Projekt), EECFA’s Croatian members, think that declining dwelling sales in Croatia have, paradoxically, failed to stop the growth in the value of Croatian residential output, because increases in the price per square meter of those dwellings that do get sold have more than compensated for the lower number of square meters bought. “But how long this can continue is unclear” – they add. “The policies that the Croatian government is implementing in order to ease the country’s housing crisis are confusing the residential picture still more, since a number of those policies have contradictory effects on output. As to non-residential building construction, output growth during the period covered by the current forecast will depend greatly on the sector, with some likely to continue to benefit from catch-up growth and EU support for a bit longer and others moving toward a steady state or even a decline. In civil engineering, EU funds continue to play the dominant role in financing construction of all sorts. Sports facility construction is experiencing a boom, but given the speed with which such projects are completed, the effect on output will be relatively brief. Renewable energy construction should be growing rapidly, but regulators’ hostility toward the sector are holding it back.”
“Romania’s economy is entering a challenging period as the recently implemented measures to reduce the national account deficit begin to take effect” – reports Dr. Sebastian Sipos-Gug, EECFA’s Romanian researcher at Ebuild. “While most forecasters do not anticipate a recession, economic growth is expected to remain subdued over the next two years. Inflation is the highest in the EU, boosted in 2025 by increases in sales taxes. As a result, consumer prices are rising at a pace that is forecasted to outstrip wage growth, leading to a decline in real incomes in both 2025 and 2026. Government spending is also facing cuts, thus both private and public consumption are predicted to decline, with a chilling effect on most construction activity types. There is also the challenge of the massive level of public investment required by civil engineering projects that have started since 2023, which will be difficult to sustain under the austerity and the mounting pressure of losing even more EU funding. On the brighter side, both the economy at large and the labour market are expected to be quite resilient. By 2027, assuming the deficit reaches manageable levels, the effects of contractionary policies should fade out, inflation could ease, and interest rates could come down. This means that demand for construction would rebound and with it, construction activity.”
Dejan Krajinović, EECFA’s Serbian researcher (Beobuild) says that “Serbia’s overall construction output sank into a negative territory in 2025, primarily owing to the weaker performance in civil engineering. This year recorded growth in building construction, but the substantial consolidation in civil engineering dragged totals in red. The completion of major road, railway and energy projects contributed mostly, but delayed construction starts played a role as well. Residential construction is stable and is on historical levels, while non-residential construction is booming led by the hosting of the EXPO 2027 in Belgrade. Investments into commercial, hotel and office buildings are all spurred by the event, with the purposely built EXPO 2027 complex consisting of numerous venues being the single largest investment in non-residential. Improving financial conditions and sustained demand still support relatively high construction activity, but a lot of global political and economic uncertainties are dimming future prospects.”
Dr. Aleš Pustovrh at Bogatin, EECFA Slovenia, says that Slovenia’s construction sector is holding steady at EUR 6bn, though growth has cooled. Residential buildings remain the anchor, with output expected to show only a slight dip in 2025, helped by strong employment, rising wages and cheaper mortgages. Property transactions rebounded in early 2025, reversing last year’s slump, while prices continue to climb amid land shortages and slow permitting. Public housing programmes are ambitious, but private developers are concentrating on Ljubljana and coastal towns. Non-residential construction is mixed: offices are recovering slowly, retail stays subdued, but industrial and warehousing thrive on export demand and automation while health and education remain at very high levels. Civil engineering and public works lean on EU-backed projects and are anticipated to reach historically high levels by 2026.
Eastern European construction markets
Andrey Vakulenko at Macon, EECFA’s Russian research institute notes that “the high key rate and the overall economic slowdown are constraining the Russian construction industry with negative trends expected for the current year and over the next two years. An easing of monetary policy, which has already begun, could help normalize the situation, but a positive effect is not expected until 2027. The main drag on construction output will likely be the residential subsector where high rates and revised government demand support principles are reducing activity among both buyers and developers. Negative trends will also likely persist in most non-residential segments due to declining growth rates of budget financing, a general decrease in business activity and a slowdown in consumption. The overall descending dynamics in the construction market may somewhat be mitigated by stable growth in civil engineering driven by export projects in energy and transport, but this growth is not predicted to be enough to keep the construction market in a positive zone”.
Prof. Ali Türel, EECFA’s Turkish researcher, reports that “the major effect of inflation-curb policies in Türkiye is the decline in disposable income and in the purchasing power of wage earners and pensioners. The moderate to lower-income population is unlikely to save enough equity for buying a home when rents have also become unaffordable for many. Ironically, housing sales have been increasing at a much higher rate than the growth of households. This can be attributed to the typical trend in Türkiye, where, during inflation, people expect a higher real return on their financial assets from real estate investments compared to alternative investment options. The reconstruction of earthquake-damaged buildings and infrastructure also contributed to the high rate of growth in building starts and completions from Q2 2025 onward, leading to the highest rates of change in the construction sector’s contribution to GDP compared to other sectors. Our latest forecast indicates that total construction output in Türkiye may reach 6.4 trillion TL in 2027 (EUR 180 billion), all at 2024 prices.”
According to Prof. Sergii Zapototskyi of Uvecon, EECFA Ukraine, despite the war and high risks, Ukraine’s construction industry remains one of the key drivers of economic recovery in 2025. The RDNA4 (the latest Rapid Damage and Needs Assessment Report) estimates Ukraine’s reconstruction needs for the next decade to be USD 486-524 billion, creating long-term demand for residential, non-residential and civil engineering construction works. Major challenges persist, including the uncertainty regarding the duration of the war, especially in frontline regions, labour shortages, bureaucratic barriers in the urban planning legislation, and logistical constraints due to the relocation of production facilities, and often, shortages in building materials. At the same time, the industry is demonstrating resilience: developers are diversifying supply chains, stabilizing procurement schedules, and increasing activity in the Central and Western regions. Demand for housing, intensive infrastructure restoration, and international investment from the EBRD, EIB, and other partners continue to support positive dynamics. The sector’s development prospects for 2026-2027 will largely depend on the security situation and the effectiveness of state recovery programs.
