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Economic growth boosts construction

Ministry of Finance
Publication date 15.9.2021 12.16
Press release

With residential construction reaching record levels, there is a risk of overheating in the housing market, according to the RAKSU construction trends group’s estimate.

With the economy growing faster than expected in the first half of this year, the construction sector has also perked up substantially during the spring. Low interest rates and consumer confidence in the economy further strengthen the positive economic trend in construction. In addition, the level of activity among professional property investors continues to be high. 

New construction is growing at an unprecedented rate, and this trend is expected to continue next year. According to the RAKSU construction trends group’s estimate, there is a risk of overheating in the housing markets. In its report published on 15 September, the group recommends that the historically high state subsidies for housing production should now be adjusted to better match the current economic situation. 

The sharp rise in demand has driven construction costs and prices up, and created a shortage of several products. It has become increasingly difficult to receive bids from contractors. Construction labour costs have increased, and the shortage of skilled labour has become the sector’s biggest problem. 

Construction activity to peak around the turn of the year

The total construction output in 2021 will remain at the 2020 level, or show a maximum increase of two to three per cent. Construction activity will peak in the second half of 2021 and the first half of 2022.

While housing construction will slow down from the current levels in 2022, commercial construction is expected to accelerate, with the most significant growth expected in 2022. According to the RAKSU construction trends group’s forecast, construction output will grow by 2–4 per cent in 2022. 

The number of people employed in the construction sector is estimated to increase slightly in the second half of this year, with more significant growth expected next year.

A growth spurt in renovation, a gradual slowdown in infrastructure construction

Although there was an increase in building renovation last year despite the coronavirus pandemic, it was clearly smaller than in previous years. According to the RAKSU construction trends group’s forecast, renovation will pick up pace in the next few years.  

Exceptional growth in civil engineering investment was seen in 2020, driven by public investment. Further growth will be seen in civil engineering activity this year while in 2022 activity is expected to contract slightly.


Sari Sontag, Senior Ministerial Adviser, tel. +358 2955 30181, sari.sontag(at)

Led by the Ministry of Finance, the RAKSU construction trends group assesses cyclical trends in building construction, infrastructure construction and renovations. The group’s reports look at trends in the construction sector at national level and, in part, at regional level. The reports examine the situation in terms of volumes, prices, costs, financing, employment and the market for construction materials. The RAKSU construction trends group also studies longer-term structural issues and adjustment needs in the construction sector, and issues recommendations on securing balanced development in the sector.