View of a building site with diggers and assorted construction equipment in a residential area of Wildberg in Baden-Wuerttemberg, Germany. (Image: joerghartmannphoto via AdobeStock - stock.adobe.com)

That鈥檚 according to projections from the Euroconstruct network, which has found that 1.5 million units are being built across the region this year, down 5.5% on 2024.

That number should increase by 3% in 2026 but the continued decline in Germany will weigh on the rest of Europe.

Ludwig Dorffmeister, construction expert at the , which is a member of Euroconstruct, said that there are signs of recovery in the rest of Europe, especially in northern Europe.

In Sweden, 12% more living space is expected to be build as early as 2025. Completions in 2026 will also increase year on year in Denmark (+28%), Finland (+23%), Norway (+13%), and Poland (+10%).

However, the number of dwellings built in 2026 will fall 9% in Austria as compared to 2025, and by 3% in France and Italy, he said.

In Germany, where the decline continues to be particularly acute, only 175,000 dwellings will be built in 2026, according to forecasts.

鈥淚n Germany, the high construction costs in particular are currently preventing a rapid market upturn. Against the backdrop of a growing population, residential construction in the rest of Europe is slowly picking up again,鈥� Dorffmeister said.

Europe鈥檚 civil engineering to slow

There was better news for the civil engineering sub-sector, which is benefiting from public investment and long-term infrastructure projects.

However, growth is likely to slow to 1.5% by 2027, after an average of 2.5% annual growth for the years 2017 to 2024, according to forecasts.

In spite of the need to expand or modernise infrastructure, governments are having to implement general austerity measures. A shortage of labour as much as rising construction costs are also hampering the sector, the ifo Institute noted.

Euroconstruct鈥檚 forecasts for different construction sub-sectors in Europe (from left to right: residential building, non-residential building, civil engineering, and total construction). Chart shows changes against the previous year in %. (Source: Euroconstruct, ifo Institut)