EECFA – Buildecon – Page 2 – construction forecasting

Is the Romanian residential construction market cooling down?

Posted on February 24, 2023March 7, 2023 by efalucskai

Written by Dr. Sebastian Sipos-Gug – Ebuild srl, EECFA Romania

This question is quite often asked both by those looking to buy a home and by those building homes. The former are hoping for prices to come down, while the latter are worried that prices will come down. Whereas a definitive answer cannot be given, Dr. Sebastian Sipos-Gug, EECFA’s researcher on Romania, has looked at several factors that might tip the balance of the residential market, one way or the other.

For a more in-depth analysis and forecast you can purchase the latest EECFA Romania Construction Forecast Report at www.eecfa.com. EECFA (Eastern European Construction Forecasting Association) conducts research on the construction markets of 8 Eastern-European countries, including Romania.

Where we are now

Despite a rocky start, real estate sales in 2022 were comparable to those of 2021 (+0.2%, source: ANCPI) and so, at least from this point of view, the market seems to be relatively stable, and could tip either way. In a regional view, the northern half of the country was more likely to see a drop in transactions, and Bucharest remains the most active market, with 1 in 5 real estate sales registered in Romania in 2022 taking place in the capital city.

*Real estate sales in 2022 as a percentage of the 2021 volumes (Source: ANCPI)*

Looking at the longer-term trends, the number of sales in 2022 were 29% higher than those of 2019, but still below the peaks of 2015 (-21%) and 2008 (-31%), and thus it would seem like we are approaching another turning point in the market cycle.

From a house price perspective, there are some signals that asking prices started to go down, however, as of Q3 2022, this didn’t translate in a decrease in official transaction prices. Instead, prices kept rising, albeit their growth rate has somewhat slowed down.

*Quarterly indices of Inflation, Rent costs and House prices (Source: Eurostat)*

Residential real estate as an investment vehicle

While no official data is available, anecdotally a significant share of newly built homes have been purchased as an investment asset, rather than to be lived in by the owner. Between 2015 and 2019 the increase in prices outperformed inflation and rent growth. Coupled with a low reference interest rate, which made loans cheap and made savings offer lower returns than inflation rate, many retail investors turned to real-estate, with residential being the most accessible market.

As inflation soared in 2022 (+13.8% yearly average), residential prices failed to follow. With inflation expected to remain high in 2023 and 2024 (+10.8% and +5.7%, according to the CNP forecasts, or +9.7% and +5.5% according to the EC forecast), the appeal of investing in residential properties would diminish, pushing down demand, transactions and prices and thus potentially leading to a negative feedback loop. Since real-estate has traditionally been held as an inflation hedge, prices would have to drop quite significantly to trigger this type of loop, a scenario that many feel unlikely at the moment.

Home affordability

Most home purchasers are looking for a place to live, and for them affordability is a very important factor. A useful estimation is that of comparing average prices to the average income, an indicator we looked at in previous blog posts (here, and here) as well. While in 2007 the average monthly wage could buy you 0.20sqm in an average sized two-room flat, this steadily grew to around 0.50sqm in 2020. However, it declined to 0.45sqm in 2022, making homes slightly less affordable for the average worker.

To add to this, rising interest rates for mortgage loans make it even harder to buy a home. In 2022 there were 8 hikes to the National Bank’s reference interest rate, that climbed to 6.75% in December, up from 2% in January 2022. This translated into a near doubling (+82%) of interest rates for new housing loans, and they will remain high as long as the National Bank keeps reference rates up. As inflation subsides, cheaper loans might be on the horizon with a positive impact on demand for residential real-estate for both housing and investment purposes.

Q4 2022 sees a continued low value of construction starts in Hungary

Posted on February 16, 2023March 8, 2023 by efalucskai

Press Release on EBI Construction Activity Report Hungary Q4 2022

The latest EBI Construction Activity Report has found that after the weak Q3 2022, Q4 2022 saw a slight nominal expansion in Activity-Start in Hungarian construction. Nonetheless, the value of started construction works was still very low; between October and December 2022 they totalled roughly HUF 650 billion.

This time, though, for better comparability, the analysts of EBI Construction Activity Report also looked at the development of Activity-Start in Q4 2022 at constant prices. This shows that Q4 witnessed a considerably lower construction value, a bit more than Q3 (the negative record in recent years). Yet, whole-year-figures were high thanks to the higher Activity-Start in the first two quarters of 2022 and projects entered construction on more than HUF 3600 billion. Although it was a new record at current prices, it did not approach the highest values of 2017 and 2018 at constant prices and was at the level of 2019 and 2021. Annual change compared to 2021 at current prices was about +21%, while at constant prices it meant a drop of 0.6%.

EBI Construction Activity Report Hungary analyses the construction industry on a quarterly basis, including the volume of newly started construction works and the value of projects completed in each quarter in aggregate and by segment as well. It is prepared by Buildecon, Eltinga (creation of indicators and development of algorithms for aggregation) and iBuild (project research and project database). The EBI Construction Activity Report Q4 2022 can be purchased at ebi@ibuild.info.

Expansion in value of started building construction works

The modest rise in Activity-Start at current prices was mostly coming from the expansion of building construction with the value of started construction works being HUF 500 billion in Q4 2022. Overall, the entire 2022 brought high numbers. Projects worth more than HUF 2000 billion entered implementation – the highest ever registered.

In Q4 the improvement over Q3 was evident in building construction even at constant prices. But the value of started works, except for 2020, was lower than the quarterly values of the past years. At constant prices, the Activity-Start indicator dropped during 2022 (-16.8%) and was roughly at the level of 2019. The better last three months were also typical for multi-unit housing and non-residential buildings, whether we look at current or constant prices.

In 2022, non-residential construction works were launched at a value of more than HUF 1800 billion, the highest amount so far. Thanks to the good first half of the year, even at constant prices, last year was considered a strong year: constant-price Activity Start of EBI Construction Activity Report was the third highest after 2018 and 2021.

Building construction projects launched in Q4 2022 included the CATL battery factory, the BMW plant, and the EcoPro BM electric battery cathode manufacturing plant in Debrecen. Construction also began on the CTP warehouses in Szigetszentmiklós, the University of Veterinary Medicine and the Siemens Energy M2B gas and steam turbine parts manufacturing plant in Budapest, as well as the logistics hall of HelloParks in Fót.

Q4 2022 Permit-Completion in EECFA area

Posted on January 20, 2023March 14, 2023 by janosgaspar

Latest update: 13 March 2023

All Q4 permit data are in.

In terms of permit, there has been no sign of pessimism so far in the SEE countries. Right the opposite. Croatia, Serbia, and Slovenia are all expanding. Bulgaria peaked with 9 million permitted residential plus non-residential sqm in Q3 before correcting downward in Q4 and Serbia is beyond 7 million sqm. The biggest country, Romania, stayed close to its peak in the meantime.

Permit recovery in Turkey has stalled, and continuous growth in non-residential cannot compensate the pessimism in the residential submarket. The current level of around 140 million sqm is still less than half of the all-time high reached in 2017. Ukraine’s stat office managed to publish permit and completion figures for the whole 2022. The non-residential permit figs are about 60% less, while residential is 50% less than in 2021. (You may go to Country-by-country sheet from completion and choose quarterly from the observed period dropdown. By default you will see the latest 4 quarters together data)

In the coming months the rest of the countries will publish their Q4 data and we will update the chart, so please check back.

The Permit-Completion visualization contains data on 8 EECFA (Bulgaria, Croatia, Romania, Russia, Serbia, Slovenia, Turkey, Ukraine) + 1 Euroconstruct country (Hungary).

See the full viz: EECFA Permit-Completion Quarterly – 13 March 2023

Open the full visualization with the link above and come back to continue reading for hints:

EECFA 2022 Winter Construction Forecast

Posted on December 5, 2022March 7, 2023 by janosgaspar

EECFA’s 2022 Winter Construction Forecast Report was released on 5 December. Full reports can be purchased. Discounts and sample reports: info@eecfa.com. EECFA (Eastern European Construction Forecasting Association) conducts research on the construction markets of 8 Eastern-European countries.

Yet another downward revision characterizes the forecast for both regions. Southeast Europe could see shrinkage on the horizon. This, however, comes after a great period of construction in between 2016 and 2021, so the market is foreseen to come down from a peak level. In this respect, the 3% decline until 2024 is no drama, in EECFA’s view. The drama is in East Europe where the peak was reached in 2018 and the market was around 10% below that peak level even before the Ukraine war began. Since then, EECFA has paused issuing forecasts in Ukraine and a status report has been prepared. Without Ukraine, the region is expected to reach its bottom in 2023.

In Southeast Europe, almost all countries have been revised downward. Three out of them, however, could see expansion until 2024. The foreseen contraction in Romania and Serbia pulls down the region to negative. Romania is quite pessimistic; the market could shrink by almost 10% by 2024. Serbia is expected to witness a sizeable drop, too, before growth returns in 2024. As the region saw much construction in 2016-2021, the market will likely decline from the peak, making the 3% drop on the forecast horizon not-so-drastic.

Bulgaria:

Under the projected economic slowdown, construction will increasingly be affected by the ongoing political instability that is likely to undermine reforms within the Recovery and Resilience Plan, and delay implementation of the EU’s operational programmes.
Тotal construction output is estimated to have grown in 2022.
For 2023-2024 civil engineering is forecasted to increase at a more accelerated pace.

Croatia:

Residential construction output held up in 2022, impervious to war and disease. But it’s likely residential’s rapid growth will over time succumb to rising prices and a falling population.
Rail construction output will rise as more rail projects come online. Some new high-cost road projects may yet be undertaken for political reasons.
Energy prices will fuel building of oil/gas port facilities, pipelines and storage in 2022-2023, construction that the EU’s green-energy push may quench in favor of renewable energy and power grid projects.

Romania:

The Romanian construction market is set to shrink slightly in 2023 and 2024 as internal and external factors conspire to make building materials more costly.
Inflation-induced lower purchasing power and growing mortgage interest rates are making loans more expensive, and few people can afford to buy a home in cash.
On the one hand, Romania could benefit from the current global instability and attract more foreign investment to grow its economy. On the other, increased energy costs translate to higher operating and construction costs and discourage investment.

Serbia:

The challenging economic situation will undoubtedly have negative effects on construction outputs. But how negative is the question of external factors and the coming events.
The domestic market is strong, with high public and foreign investments, as well as record employment. The highest economic risk comes from inflation and the expected recession in the EU.
The current economic slowdown could deepen the contraction in case of a prolonged crisis.

Slovenia:

Slovenia has experienced expansion in construction output on the back of the strong overall economic growth.
However, risks for the future include high inflation, large construction cost increases, and overheating economic growth. And increased interest rates will depress residential output in the future.
Supply chain constraints might jeopardize the completion of large civil engineering projects.

In East Europe, 2022 could be the 4th consecutive year of drop in Türkiye, and no quick recovery is foreseen on the horizon. We have turned somewhat optimistic in Russia, but only from 2024 on. Without Ukraine, the region will likely hit bottom in 2023. The region reached its peak in 2018 and just before the war in Ukraine started, the market was around 10% below this 2018 level. Owing to the war, Uvecon, the Ukrainian member institute of EECFA, has prepared a status report for the second time instead of the forecast report.

Russia:

Direct and indirect effects of sanctions hammered the construction market that declined faster in 2022 than previously expected.
Forced acceleration of projects in transport and energy, in response to export and import structure changes due to sanctions, will spur growth in civil engineering.
Many targeted programs and national projects will support the construction sector throughout the forecast horizon.

Türkiye:

The construction industry has been trying to deal with high inflation that has led to 120% yearly rise in construction cost and 189% increase in housing prices.
There has been some deficit between produced and needed home numbers since 2000, augmented by the influx of refugees from Syria and neighbouring countries (3,920 million registered; unknown unregistered).
The low-cost housing project of the government as of September is expected to stop the current slump in the construction sector.

Ukraine:

Prospects for construction depend on the existing situation on the market as a result of the destruction of residential, non-residential and engineering infrastructure, and the end of hostilities with the possible economic recovery.
Total area of damaged or destroyed housing is 74.1 million sqm (7.3% of the total area of Ukraine’s housing stock), a number which, unfortunately, grows every day. Restoring the housing stock will become a key issue for Ukraine after the war ends.
Energy infrastructure remains the top priority for recovery, as nearly 40% of the energy system has been destroyed.

Construction in Hungary leaves a weak quarter behind

Posted on November 22, 2022March 7, 2023 by efalucskai

Press Release on EBI Construction Activity Report Hungary Q3 2022

EBI Construction Activity-Start recorded a sharp falloff in Q3 2022. Between July and September, construction projects started at a value of less than HUF 480 billion – the lowest amount since Q3 2020.

The recent years have seen a considerable price rise in the Hungarian construction industry. In order to filter this out, the analysts of EBI Construction Activity Report compared the value of started construction works at constant prices, using Q3 2022 prices. Based on this, at constant prices, an even greater decline is seen in case of started construction works. In Q3 2022 they have registered their lowest value since 2015. At the same time, thanks to the successful first quarter, the drop was not yet visible based on the figures of the first 9 months, which even at constant prices exceeded the same periods of 2020 and 2021.

Value of building construction works down

The decline in Activity-Start witnessed in the construction industry as a whole was observed in building construction, too. The total value of started construction works was around HUF 300 billion, far below the typical first and second quarters. Looking at constant prices, the drop is even more visible. One needs to go back to Q1 2015 to find a lower value than this year’s third quarter. Yet, it is also true in case of buildings that the better first and second quarters pushed up annual figures.

The decrease was also true to residential and non-residential. For the latter, the Activity-Start of EBI Construction Activity Report was around HUF 260 billion, which, at current prices, fell short not only of the figures of the first two quarters, but also of most of the levels of quarters between 2018 and 2021. At constant prices, it was the lowest since Q1 2015.

Building construction projects launched in Q3 2022 included the W-Scope separator film factory in Nyíregyháza, and ParkSide Offices, RTL HQ, Zugló-Városközpont Offices 1 in Budapest. Work also began between July and September on Phase 2 of Campus in Kecskemét, Panattoni Park Budapest City West logistics center in Törökbálint, and the Hungarian University of Agriculture and Life Sciences in Gödöllő.

What opportunities the RRF can bring to Bulgaria’s construction

Posted on October 17, 2022March 8, 2023 by efalucskai

Written by Anita Dangova, EPI, EECFA Bulgaria

Bulgaria’s Recovery and Resilience Plan (RRP) aims to facilitate economic and social recovery from the COVID-19 crisis and to create a more sustainable, equitable, and successful economy. It includes a set of schemes not only to restore the economy’s growth potential, but to boost it, too. In achieving this, several construction projects to increase energy efficiency and decrease CO2 impact are to be implemented in 2023-2026.

*The official cover of Bulgaria’s RRP; Source: National Recovery and Resilience Plan of the Republic of Bulgaria*

How the RRP will impact housing construction

One of the major projects provides support for sustainable energy-efficient renovation of the housing stock since, currently, only 7% of the floor area of occupied residential buildings complies with modern energy efficiency (EE) requirements. The project, to be launched by end 2022 with an implementation period till 2026, will attract a total of EUR 607mln under the Recovery and Resilience Facility (RRF). Multi-family residential buildings will be eligible for financing nationwide and renovated units have to achieve 30% primary energy savings. Residential buildings to be financed under this scheme are divided into two groups depending on the time of application of owners’ associations:

applications until March 2023: 100% of the project funding will be provided from the RRP,
applications from April 2023 to December 2023: 80% of the project funding will be provided under the RRP, and 20% will be in the form of self-contribution.

Another project with an implementation period till 2025 is dubbed “Program for the financing of single renewable energy measures in single-family and multi-family buildings”. Total planned funding is EUR 123mln (EUR 72mln from the RRP and EUR 51mln in the form of national and private co-financing). The project aims to increase the use of renewable energy in final energy consumption in households by financing new solar systems for domestic hot water and photovoltaic systems. There are two measures:

construction of solar systems for domestic hot water supply. The maximum amount of grant per individual household is to be 100% of the cost of the system, but no more than EUR 1000;
construction of photovoltaic systems up to 10 kW. The maximum amount of grant per individual household is to be up to 70% of the system cost, but no more than EUR 7700.

How non-residential construction will benefit from the RRP

One of the projects finances – between 2022 and 2026 – the sustainable energy renovation of non-residential buildings owned by municipalities and national authorities (regional administrations, ministries); the Bulgarian Academy of Sciences; public-private partnerships for buildings in the field of production, trade and services; non-profit legal entities, municipal enterprises, and commercial companies. The project consists of two components: 1) EUR 189mln (without VAT) to public buildings; 2) EUR 120mln (without VAT) for manufacturing, commercial and service buildings.

How subsidized mortgages changed the Russian housing market

Posted on October 2, 2022March 7, 2023 by efalucskai

Written by Andrey Vakulenko – MACON Realty Group, EECFA Russia

Housing construction remains one of the biggest segments of the Russian construction market, affecting both related industries and the overall macroeconomic situation, including GDP dynamics and labor market indicators. Because of the stagnating real income of the population over the past years, housing demand was stimulated by affordable mortgages. State programs that started back in 2018 targeted specific groups, but due to the pandemic in 2020 they became part of a comprehensive anti-crisis package to stimulate the economy, and unprecedented measures were launched to support construction. Thus, preferential mortgage became available to everyone. This excess demand caused record price increases in 2020-2021 and the rapid exhaustion of the positive effect of cheaper loans. As a result, housing has become even less affordable for buyers, and the market has become addicted to cheap mortgages whose issuance was supported exclusively by the state. Owing to the economic crisis caused by the events in early 2022, the central budget will experience a shortage of funds and spending on certain areas will be reduced. The mass subsidizing of mortgage rate is also likely to fall under sequestration, which may have negative consequences on the market in terms of demand.

Subsidized mortgage schemes then and now

Subsidized mortgage schemes to stimulate housing demand and support housing construction as a whole started in 2018. By then, the real income of the population had been declining for more than 3 years (from 2014 on). Subsidized mortgage rates (at the time about 10%) could stimulate demand and help those in need of buying a new home:

‘Family Mortgage’: launched in 2018, it was the first program to reduce mortgage rates to 6% for families with children.
‘Far Eastern Mortgage’: a targeted state program that started at end 2019 (a reduction to 2% for buying a home in the regions of the Far Eastern Federal District). Both programs are still in effect (with minor changes in conditions) and are valid until the end of 2023.
‘Rural Mortgage’: a targeted mortgage scheme, though geographically limited, started in 2020 (this year it was announced to become indefinite) for citizens intending to buy or build an own house in settlements with a population of less than 30,000. Participants can take up a loan for a new home or for a used home. The goal is to increase the number of people living in rural areas.

All three programs apply only to borrowers meeting certain conditions. All of them supported demand and stimulated buyer activity. But:

The ‘Preferential Mortgage’ program (as part of anti-crisis measures to restore the economy at the onset of the pandemic in early 2020) had the biggest impact on the market. During this time quarantine restrictions caused a large-scale economic crisis and a major drop in the real income of the population, reducing the solvency of potential homebuyers and the number of transactions. It endangered housing construction, which is a critical segment for the economy. To aid the construction industry, the government implemented the scheme dubbed ‘Preferential Mortgage’. Unlike the other three schemes, it was available to everyone and citizens were able to take up a mortgage at 6.5%. Initially planned to be valid until November 2020, it was extended first until July 2021, and then until end 2022, but with tightened conditions: the maximum possible loan amount was greatly reduced, and the loan rate was raised to 7%. The events in early 2022 led to macroeconomic instability and a sharp increase in the key rate of the Central Bank. The rate under the Preferential Mortgage program also rose to 12%, although by June 2022 it was reduced to 7% again. It also became possible to combine soft loans with mortgages on market terms, which greatly increased the maximum loan amount.
The latest state program to support the mortgage market has been the so-called ‘IT mortgage’ introduced in May 2022 for the employees of IT companies. It has become part of the large-scale measures to promote the development of IT industry in Russia and stop the brain drain.

The impact of subsidized mortgages on the housing market

In 2018-2019 the volumes of the mortgage market stagnated: the number of issued loans dropped (-8% in 2019 against 2018) and there was a minimal positive correction in the total number of transactions in the primary market (+1% in 2019).

The targeted schemes launched in 2018 helped certain categories of citizens to solve housing problems but did not have a huge impact on the whole primary market of multi-unit housing. But everything changed in 2020 with the Preferential Mortgage program available to everyone without exception. At end H1 2020, the number of transactions in the primary multi-unit housing market was 37% less than in 2019 due to quarantine measures and the general economic downturn after the start of the pandemic. However, the Preferential Mortgage program launched in Q2 2020 contributed to a sharp increase in demand, and in H2 2020 the number of transactions was already 33% higher than in H2 2019. In general, according to the results of 12 months of 2020, transactions slightly decreased, but the effect of the program in the second half of the year almost made up for the decline at the beginning of the year.

More cautious Hungarian construction industry

Posted on September 2, 2022July 25, 2023 by efalucskai

Press Release on EBI Construction Activity Report Hungary Q2 2022

Hungary’s high construction Activity Start in Q1 2022 was followed by a slowdown in Q2. The Q2 2022 EBI Construction Activity Report has found that between this April and June construction works started at a value of around HUF 800 billion. Although the value of projects entering construction decreased in Q2, these are not low numbers at all as Activity Start has been the 5th highest (on a quarterly basis) of recent years. It should be added, though, that recently construction costs have dramatically increased, massively pushing up the Activity Start indicator calculated at current prices, while at constant prices the volume would be lower.

How Türkiye is handling the rental housing crisis under the effects of the large number of refugees

Posted on August 25, 2022March 7, 2023 by efalucskai

Written by Prof. Ali Türel, EECFA Türkiye

Türkiye’s high inflation (79.6% in July 2022 y-o-y), stemming from the Turkish lira’s continued devaluation and the economic consequences of Russia’s invasion of Ukraine, along with soaring energy prices are impacting construction. There is also a rental housing shortage aggravated by the 3,920 million refugees the country is hosting. To counterbalance the negative trends, in addition to the rent freeze law enacted in June, the Turkish Government has announced a big social housing project starting from mid-September.

*Ankara, Türkiye. Photo by Ekrem Osmanoglu* *unsplash.com*

Economy and housing market

The economy of Türkiye is facing new problems as the severity of the pandemic is easing. The unparalleled FX volatility since Q4 2021 has led to high inflation. The war between Russia and Ukraine has also contributed to the rise in inflation due to increased energy prices, affecting construction activities as well as the production of certain industrial and agricultural goods.

In June 2022, construction cost rose by 105,73% and residential construction cost by 100,87% yearly. The rates of change in Consumer Price and Domestic Producer Price Indices were by 78,62% and 138,31%, respectively.

Home prices have been growing at higher rates than construction costs. The latest statistics dated May 2022 of the Central Bank of Türkiye reports that the annual growth in the national average of home prices was 145,5%, being 44,63 percentage points above residential construction costs. Such a great difference between home prices and home construction cost may indicate a supply deficit in the housing market due to the high level of housing demand.

Building construction in general, and housing construction in particular, had positives rates of change in 2021; starts grew by about 30%, completions 4%. But occupancy permits issued 627 thousand dwelling units were less than the needed number of housing for 725,7 thousand newly formed households in 2021. In H1 2022, however, housing starts registered an 11% drop, and completions an 8% growth compared with the same 6 months of 2021. The falloff in residential building starts was less, the increase in completions was greater than all buildings’ average. The positive rates of change in completions can be related to big backlogs of buildings under construction fuelled by big rises in home prices.

Building materials

The Index composed by the Association of Construction Material Producers of Türkiye has had a negative trend since September 2021; it fell by 10% from 80,15 in in that month to 72,2 in July 2022 and the yearly rate of change was -9,5%, as shown in the July 2022 publication of the Index.

The Association indicates that because of the decline in demand and orders for their products from national and international markets, together with the appreciated risks and uncertainties about the economic environment, the trend may not be reversed in the short run.

Rental market

The rental property market was hammered most by the shortage of supply and sharp increases in rent prices. As a result, a rent freeze for homes was introduced in June 2022 (in effect until 1 July 2023), limiting rent increases by 25%.

The severity of the crisis in the rental market can also be related to the great number of refugees having accumulated since 2011. As per the UNHCR statistics, in August 2022 Türkiye hosts 3,920 million refugees (3,6 million Syrian and 320,000 from other countries) which may add up to as much as 1 million households. Because most refugees live in rental accommodation in cities, it appears that the additional amount of rental housing couldn’t be delivered in such a short period of time.

Social housing scheme

In mid-September 2022, the Turkish Government is going to launch a large-scale social housing project throughout the country. It will be undertaken by the Housing Development Administration (HDA), which is a central government organization that built about 1.1 million dwelling units during the last 24 years in all of the 81 provinces by developing publicly owned land after being transferred to the HDA. About 86% of homes built by the HDA were sold with mortgage loans of the HDA to moderate-to-lower income households not owning a home. Although the completion of construction will take some time, this project will stimulate demand for construction works and materials.

Construction forecast for Türkiye is available in the latest EECFA Forecast Report up to 2024 which can be purchased on eecfa.com.

EECFA countries in the European Commission’s 2022 Macro Forecast

Posted on July 25, 2022July 25, 2023 by efalucskai

Prepared by Tünde Tancsics and Dóra Barát – ELTINGA-EECFA Research

Prior to the publication of our 2022 Summer EECFA Construction Forecast Report, the European Commission released its forecast for the economic prospects for EECFA countries. Here are the main changes in the prospects between Autumn 2021 and Spring 2022. And as a comparison, at the end of the post you can check how we have revised our forecast.

Economic outlook has deteriorated in almost all EECFA countries compared to autumn but remains positive in most. The only exception is Russia where the economy is expected to shrink instead of the previously anticipated growth due to the war and the related sanctions. The prolongation of the war could also lead to a further decline in the economic growth of all countries.

Link to this viz >>

Apart from Russia, the rest of the EECFA countries (plus Hungary, which is a Euroconstruct member) were expected to see high growth rates of over 3.8% in Autumn 2021. The slowdown of economic growth in Slovenia and Serbia is projected to be moderate, respective -0.5 and -0.7 percentage points in the Spring 2022 forecast for the period of 2022-2023. However, all other EECFA countries have larger projected declines in economic growth (ranging from -1.2% to -6.9%) compared to both the EU and the Eurozone. The forecasted economic growth fell most in Russia, Romania and Turkey (-6.9, -2.1 and -1.5 percentage points respectively). Russia is the only country that not only represents an economic contraction (-4.45%) but is also the only EECFA country to remain below the estimated GDP growth rate of the EU and Eurozone for Spring 2022. Thus, apart from Russia, the others still have the same or higher economic growth than the EU average.

In terms of gross fixed capital formation (investment), predicted growth has decreased in both EECFA countries and the Euroconstruct member Hungary, as well as in the EU. However, the extent of this decrease varies significantly among countries. Whilst in the EU and the Eurozone, projected GFCF growth fell moderately (-1.1% and -0.9%, respectively), all other countries are expected to see a decline of over 2 percentage points, Bulgaria excepted. This implies, for instance, stagnating GFCF in Bulgaria and a remarkably large negative growth in Russia (-11%), similar to the GDP growth indicator. There is also a notable falloff in Hungary and Romania (-4.9 and -4.6 percentage points, respectively), although the former started from an expected growth of more than 10% in autumn, while the latter from only 6%. It suggests that the estimated growth of the GFCF for 2022-2023 in Spring 2022 is just above 1% in Hungary. In other EECFA countries, the decline in GFCF growth varies between 2.2 and 3.1 percentage points.

Construction growth has been revised downward everywhere except for Bulgaria (0.4 percentage points). While in the EU and Eurozone the indicator declined by approximately 1 percentage point, in Slovenia, Romania and Hungary, construction growth is to fall by more than 5 percentage points in 2022-2023. However, growth remains positive for every country where data is available, with Bulgaria leading the prospects (6.6%).

So this above is the European Commission’s opinion. And here you can check how we, EECFA see the upcoming years for Eastern European construction markets. Croatia and Slovenia are on the top, while Russia and Serbia are on the bottom.

Link to this viz >>

Our approach is different from that of the Commission, as we provide forecast for each segment of construction. That is, we have a bottom-up approach, where forecast is computed separately for residential, office, retail, industrial buildings, roads, railways, utility etc. segments. Mail us if you are interested.

Or check our sample report and order on eecfa.com