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Economic trends in construction

The RAKSU group studies trends in construction led by the Ministry of Finance and assesses the development of economic trends in the construction of residential buildings, infrastructure and renovation. The members of the group include key authorities and members of organisations in the field.

Finland’s construction growth rate will slow considerably in 2019, particularly as a result of a decrease in housing construction, according to a report published on 27 September 2018 by the RAKSU working group on business cycles in the construction sector. The full-year growth rate forecast for 2018 was revised upwards. The RAKSU group expects construction output as a whole to be up by 3–4% this year and the output level in 2019 to remain close to this year’s figure. The forecast for construction growth in 2019 is in the range 1% to  –1%.

The cubic metre volume of all building permits granted in the first six months of this year was down by 10% from the same period last year. Permits granted for housing were down by 12%. This turnaround in the permit figures signals a slow-down in construction. The RAKSU group’s forecast for housing starts this year is 42,000–44,000 units, and for 2019 a few thousand less than this.

Renovation and infrastructure construction will continue to grow, though at a slower rate. Growth in civil engineering works will be minor because the present Government’s investment in key projects will end as the government term draws to a close. Construction work on healthcare and school buildings is expected to pick up again.

Although inflation is at very modest levels, investment costs in the construction sector are already rising at an annual rate of almost 5%. Construction costs have also increased. In July–August, these were up by almost 3% compared with the same period a year earlier.

According to figures from Statistics Finland, the unemployment rate in the construction sector fell to 6.3% in the second quarter of 2018 and is significantly lower than the general rate of unemployment. At the same time, the number of vacancies in the construction sector rose to 6,400. A shortage of skilled labour is now considered the biggest obstacle to growth.

 

Raksun logo

 

RAKSU group

 

Chair

Ms Sari Sontag              Ministry of Finance

Members

Mr Tino Aalto

The Finnish Association of Consulting Firms SKOL

Mr Antti Aarnio

RIA ry

Ms Johanna Alatalo

Ministry of Employment and the Economy

Ms Terhi Heikkonen

Confederation of Finnish Industries EK

Mr Matti Holopainen

Association of Finnish Local and Regional Authorities

Mr Ari Huomo

Finnish Transport Agency

Mr Kimmo Huovinen

The Housing Finance and Development Centre of Finland ARA

Ms Kati Jussila

Ministry of Finance

Mr Heikki Jämsä

INFRA

Mr Jukka Kero

The Finnish Real Estate Federation FREF

Mr Harri Kähkönen

Ministry of Finance

Mr Tommi Laanti

Ministry of the Environment

Ms Armi Liinamaa

Ministry of Finance

Mr Eero Nippala

Tampere University of Applied Sciences TAMK

Ms Paula Paavilainen

Statistics Finland

Mr Pekka Pajakkala

Forecon Ltd

Mr Sami Pakarinen

Confederation of Finnish Construction Industries RT

Mr Jouni Parkkonen

Association for Advocating Affordable Rental Housing KOVA

Ms Hanna Perälä

Ministry of Transport and Communications

Mr Mark Rantala

Ministry of Finance

Ms Elina Selinheimo

Ministry of Finance

Mr Mikko Somersalmi

The Finnish Accociation of Building Owners and Construction Client RAKLI

Mr Hannu Viertola

Bank of Finland

Mr Tuomas Viljamaa

Finnish Landlord Association

 

 

 

 

 

 

 

Contact information

Ms Sari Sontag, Senior Financial Adviser
Ministry of Finance, Economics Department, Macro Forecasting
+358 2955 30181
sari.sontag@vm.fi