In 2025, only 1.5 million residential homes are expected to be completed in Europe, marking a 5.5% decrease compared to 2024. According to EUROCONSTRUCT, this is the lowest figure since 2015. A slight market recovery of about 3% is projected for 2026.
Reasons for the Slowdown in Construction
The primary factor hindering market growth is the high cost of construction. The situation is particularly difficult in Germany. According to Ludwig Dorffmeister fr om the ifo Institute, material and labor costs have become the main obstacles to the development of the construction sector.
Germany is experiencing the sharpest decline: by 2026, only 175,000 homes are expected to be built, which is 15% less than in the previous year. In other European countries, the situation is slightly better, as population growth continues to support housing demand.
Growth Prospects in Specific Countries
Despite the overall downturn, some European countries are expected to see an increase in construction volumes:
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Sweden anticipates a 12% increase in 2025.
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Denmark, Finland, and Norway expect growth of 28%, 23%, and 13% by 2026, respectively.
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Poland is projected to see a 10% rise in construction.
Continued Decline in Other Regions
Some European countries, on the other hand, continue to show negative trends:
Situation in Civil Construction
Despite challenges in the housing sector, civil construction related to transportation and energy infrastructure continues to grow due to government investments. However, in the medium term, growth rates are expected to slow: by 2027, an increase of only 1.5% is forecasted, compared to the 2.5% average from 2017 to 2024.
Factors Behind the Slowdown
Key reasons for the decline in construction rates in Europe include:
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Pressure on public finances and austerity measures.
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Labor shortages in the construction sector.
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Rising costs of materials and production.
The European real estate market is facing serious challenges. However, in some regions, particularly in Northern Europe, signs of recovery are emerging. Civil construction remains stable for now, but a gradual slowdown is expected in the coming years. Given these conditions, investors should carefully analyze regional market trends before making real estate investment decisions.
Türkiye Real Estate Market in 2025
In Turkey, construction costs have risen by 33% over the past year. The market is expected to face a housing shortage in the near future. This is particularly relevant for the resort city of Alanya, wh ere the construction boom has slowed down. Most developers are completing projects started 1-2 years ago, while very few new projects have been announced. Prices for these properties will no longer be the same as in 2024, as land and construction costs continue to rise.
With migration policies affecting demand from foreign buyers, developers are offering significant discounts and attractive installment plans. Discounts of up to 30% are available on liquid properties in the secondary market. Learn more about the current "buyer’s market" in Turkey by requesting a consultation.