Lower growth for construction industry next year

Construction workerConstruction worker

Growth in the construction industry is expected to be 6.8% this year, but it will be far lower over the course of the next two years.

 

According to the Byggenæringens Landsforening, a new report on market outlook and forecasts for the construction and civil engineering markets, in 2016, growth was at 5.1%.

This year it will be 6.8%, while in 2018 and 2019 it is expected to grow only 3.6 and 2.6%.

‘The report shows that companies need to prepare for the historically high growth that has been characteristic of recent years, to slow down, and that they can rely on a tougher market in the future,’ said Jon Sandnes, CEO of BNL to NTB news.

Different prospects

The building industry divides the report into prospects for new buildings, the renovation market, and the construction industry.

Investments in new homes increased to record levels last year and this year, with growth of 13 and 15 billion respectively. According to BNL, 38,000 new homes will be built this year, the highest since 1979.

In light of the fact that lower housing prices are expected in the future, and new housing sales are slower, investment is also expected to decline by almost 1 billion in 2018, and by another 6.4 billion in 2019.

The construction market is growing the most, and as seen, an increase of 20 billion in investment in transport will compensate for the investment fall in new housing construction until 2019.

Bandaging the wounds

In the refurbishment market (the ROT market – rehabilitation, rebuilding and extension), investment this year will increase by 3.5%, while growth will decrease to 2.5 and 1.8 per cent in the next two years. This is especially in the area of rebuilding activity, that contributes most to continued growth.

Activity in the construction industry is affected by the oil price drop, but increased public spending, and rising housing investment have been very important. These factors hindered recession in the mainland economy in 2016, and have contributed positively to growth this year.

 

©  NTB Scanpix / Norway Today

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