Where is the upswing?

Where is the upswing?

“The residential construction sector will also record a slight improvement at most in 2026.” Robert Jägersberger has no illusions about the situation in domestic housing. The Federal Guild Master of Construction continued: “We do not hope for a turnaround that is worthy of the name until 2027 at the earliest.” Clear words also come from Georg Bursik, Austrian boss of the building materials manufacturer Baumit. “We are still a long way from a recovery or improvement for the third year in a row,” he says – and describes the construction situation with a blunt word: “shitty”. Markus Stumvoll, Managing Director at Rohrdorfer Baustoffe, reports an unprecedented decline in his industry: “There has never been anything like this in the history of ready-mixed concrete,” says Stumvoll. He also does not expect a noticeable recovery before 2027 or 2028.

Waiting for the turnaround

The construction industry has become aware that the long-awaited turnaround is a long time coming. Instead of a quick recovery, there is a long, arduous road back to better times. This is reflected not only in the stagnating order intake, but also in the wait-and-see attitude of investors and property developers. "Anyone who believes that the next few years will bring another boom will be disappointed. There will be no overheating, but a slow, gradual recovery. That is the new normal," says Florian Bouchal, CEO of the Frauenthal sanitary ware wholesaler.

The combination of still fairly restrictive financing conditions, high inflation and political uncertainty is inhibiting the willingness to invest as well as planning behavior. Many projects remain on paper or are postponed for years. Residential construction is still “not being built at all,” says Baumit Austria boss Bursik – despite the increasing population. “The new building is complete – there haven’t been as few apartments completed in 15 years as there are now,” says Bursik.

He estimates that it would be necessary to build between 40,000 and 60,000 new residential units per year. At the beginning of the year we were 40 percent away from this. Not enough is being done in the area of ​​renovation either. Over two million buildings in Austria do not meet the current thermal standards. Without drastic measures, it will take a century until these stocks are energetically upgraded, said Bursik.

The mood in the construction industry is supported by the figures from economic researchers. Wifo expects the total construction volume to grow slightly by 0.4 percent this year. And there can be no talk of the construction turbo starting up in the following years either: Wifo is forecasting an increase of 0.5 percent for 2026 and 0.9 percent for 2027.

The situation in residential construction remains particularly modest: a decline of 0.5 percent is forecast for 2025, followed by a marginal increase of 0.2 percent in 2026, before growth of 0.5 percent appears possible in 2027. According to Wifo, the structural weakness in residential construction results primarily from high financing costs and persistently weak demand.

Things are looking somewhat better in commercial building construction, which is expected to record growth of between 0.6 and 1.0 percent in the coming years. However, the strongest impetus comes from civil engineering, which is supported in particular by public infrastructure investments. For this area, Wifo expects growth of 0.9 percent (2025), 0.7 percent (2026) and 1.2 percent (2027). Nevertheless, the situation in construction remains rather tense. As one developer puts it: “Growth yes, boom no.”

Not much can be expected from the federal government either. “Times will remain difficult in the coming years,” said Chancellor Christian Stocker when presenting the new economic stimulus package in September. Austria has to save. Nevertheless, the government presented an economic stimulus package worth one billion euros - 600 million of which were already earmarked in the budget, the rest will be raised through reallocations and cuts in other areas. “More money would be nice, but if it is not available, you have to replace it with creativity,” said Stocker.

The central elements of the package are an increase in the investment allowance, support for energy-intensive businesses amounting to 150 million euros and 120 million euros for broadband expansion. In addition, a location fund is intended to mobilize private capital. Savings should also be made in the area of ​​bureaucracy: According to Chancellor Stocker, simplified and shortened procedures as well as de-bureaucratization measures should ensure more planning security and make investments easier. Patience is necessary, said the Chancellor. “To think that everything happens overnight is a misconception.” The current package has laid the foundation for the upswing, but it will “perhaps not happen until tomorrow or the day after.”

The reactions from the construction industry are correspondingly factual: “The economic stimulus package is not a big hit, and the federal government admitted that from the start,” says Federal Guild Master Jägersberger. Although he fundamentally welcomes the planned increase in the investment allowance, he criticizes the fact that the building sector has so far been excluded from it. “If that doesn’t happen, then this so-called economic stimulus package will completely bypass the construction industry.”

From his point of view, it would help the construction “if the measures contained in the government program are addressed and implemented quickly”. Jägersberger lists the most important measures: the earmarking of housing subsidies, an evaluation of the housing package, a new edition of the renovation check, the consistent investigation of cost-increasing building standards, and real de-bureaucratization measures. “The government program contains important declarations of intent for the construction industry,” he said. "Ultimately, it will depend on the financial viability and implementation of the planned measures as to whether the program actually develops the positive impulses hoped for. The construction industry in particular, with all its downstream areas, is the economic engine par excellence and an essential pillar of the domestic economy."