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Report from
Europe
EU 2025 construction growth expected to be modest
According to a report from Netherlands-based
international bank ING, the EU construction sector is set
to start recovering in 2025, with rising property prices
‘making building new houses more attractive for project
developers’. However, it says the upturn will be slow and
modest.
The report by ING Senior Economist Construction,
Maurice van Sante, says that it expects the sector to
increase output by just 0.5%. This follows shrinkage of
2% in 2024.
Average prices of existing houses in the EU started to rise
in started to rise in October 2024 giving developers the
chance to ask for higher prices for new buildings, enabling
them to better cover the rises in raw materials costs seen in
the last couple of years. Overall, in Q3 prices of existing
houses rose 1.5% to reach a record level.
The ING report says contractors remain pessimistic about
the size of order books and describes the level of building
permits issued in Q3 last year as disappointing.
“However, the sharp decline we saw earlier has stopped
and compared with the same period in 2023, it actually
grew, albeit marginally,” it says. “It does look as though
the lowest point [in the market] has been reached.”
It also predicts growth the renovation sector and
investment in infrastructure to rise, driven by EU recovery
funds, investment in digital infrastructure, waterworks and
energy transition.
An ongoing issue, say some contractors, is the
construction labour shortage, but fewer are complaining
about the problem. Longer term to resolve the shortfall,
says ING, building companies need to invest in efficiency
gains through ‘industrialisation and digitisation’.
A problem in recent years has been the price disparity
between existing homes and cost of new homes, with the
latter driven by rising materials and energy costs. This, of
course, has made new build houses less competitive.
The biggest gap between existing and new homes is seen
in Germany, Spain and Turkey. But in some other EU
countries, the rising price of existing houses mentioned
above is encouraging the sector.
“In the Netherlands, the prices of existing homes have
already outpaced prices of new, making Dutch new houses
attractive for home buyers and allowing developers to
increase sales prices to cover costs,” says ING.
It adds that most builders across the EU remain wary
about increasing prices for the time being. Only 1% of
German builders plan to do so, and in France the majority
are actually planning to decrease them due to sluggish
demand.
But ING reports a slight increase in those canvassed
elsewhere in the EU, like those in the Netherlands,
planning to do so.
In the Netherlands around 40% say they will increase them
over the next three months, around 15% in Poland, 7% in
Belgium, about 5% in Austria and 2% in Spain. The level
in the EU as a whole is 5%.
The report also gives snapshots of the state and outlook of
some individual country construction sectors.
It says that in December 2024, German contractors were
the most pessimistic in the EU, with issue of building
permits for residential developments halving between
2022 and 2024 and seeing a continuing drop in Q3 2024.
Civil engineering has seen some improvement, but
construction volumes overall fell 3% in 2024, and no
significant improvement is expected in 2025, which will
mean that ‘the EU’s largest construction market won’t
have seen growth for five years in a row’.
ING expects French construction output to shrink 1% in
2025, with contractor sentiment at its lowest level since
the pandemic. The issuance of building permits has
decreased by a third in two years. But the decline is
slowing, and a more positive sign is that prices of both
new and existing homes have started to increase again.
Netherlands building sector output contracted 3% in 2024,
but an upswing is expected through 2025.
“Rising house prices, increasing sales of new houses and
better-filled order books are clear signs that Dutch housing
construction is picking up,” says ING. There are
‘bottlenecks’ for the sector, including structural shortage
of building land, but ING forecasts it will grow 1.5% this
year.
The Spanish construction sector, says ING, is ‘strongly
recuperating’. Output grew 4.5% in 2023 and 1.5% in
2024. Going forward it will benefit from a strong Spanish
economy, ‘skyrocketing’ issuing of building permits and
EU recovery funds.
The Polish building industry saw output fall 6% in 2024.
But issue of building permits is increasing, prices for new
and existing homes are now rising and ING forecasts
overall growth in 2025 of 1%.
The Turkish building sector grew 5% in 2024, but industry
confidence is reported as negative, with builders
concerned at low order books. Issue of building permits
increased in Q3 2024 but is ‘following a bumpy road’.
ING forecasts industry output will grow in 2025 and 2026,
but at a lower level than in 2024.
EU infrastructure construction output, says ING, grew just
1% in 2024, following 3.2% growth in 2023. But the
producer confidence indicator for the sector is positive and
ING expects it to ‘perform positively in 2025 and 2026.
The Germany-based IFO economic institute takes a similar
line on the EU construction sector. It states that the
number of new dwellings built across Europe in 2025 will
be just 1.5 million, 5.5% fewer than in 2024.
However, recovery will set in through the year and in 2026
an increase of 3% is expected. It also picks out Germany
as a market that will continue to struggle due to high
construction costs. The outlook for new home building in
Austria, France and Italy is also downbeat, with the
number expected to be constructed in 2026 in the former
down 9% on 2025, and in France and Italy down 3%.
But there is greater positivity in Sweden with 2026
completions expected to rise 12%, Denmark 28% Finland
23%, Norway 13% and Poland 10%.
CBRE, the commercial real estate services and investment
specialist, highlights Europe’s urgent need for new homes.
It says its housing shortage now equates to around 9.6
million dwellings, or 3.5% of the current stock.
See:
https://think.ing.com/articles/returning-but-low-growth-
expected-in-the-european-construction-
sector/#:~:text=at%20a%20glance-
,Low%20growth%20expected%20in%202025,signs%20are%20s
lowly%20becoming%20visible.
https://think.ing.com/articles/returning-but-low-growth-expected-
in-the-european-construction-sector/#:~:text=at%20a%20glance-
,Low%20growth%20expected%20in%202025,signs%20are%20s
lowly%20becoming%20visible.
https://www.cbre.com/insights/books/european-real-estate-
market-outlook-
2025/living#:~:text=Permit%20levels%20for%20new%20homes
%20are%20decreasing%2C%20while%20demand%20is,worsen
%20over%20the%20next%20year.
UK Government commits to use of timber in building
UK timber trade organisation Timber Development UK
has welcomed Government commitment to encourage
application of wood in building to help meet the country’s
housing shortage and reduce construction’s environmental
impact.
What it describes as ‘ambitious new plans to increase use
of timber in construction’ were announced by UK
Environment Minister Mary Creagh at the Timber in
Construction (TiC) Summit in London at the end of
February. She said the goal was to boost the domestic
timber industry, support economic growth, create rural
jobs and meet housebuilding targets – and the government
target is for 1.5 million new dwellings to be built in the
next five years.
Details were also given of a new version of the UK’s
Timber in Construction Roadmap, developed with industry
and government input, which further outlines priorities
and key actions for the building sector. These include
encouraging the use of sustainable, low carbon building
materials, and ensuring carbon emissions are considered
during the design, construction and use of buildings.
Some key additions to the Roadmap include a greater
acknowledgement of the importance of timber reuse and
species diversification, as well as actions to strengthen the
impact and accountability of Government to the Roadmap.
These include:
Exploration of the use of Government buying
standards to encourage use of sustainable, low
carbon building materials.
Government and industry working with academia
and the Building Safety Regulator to research
outstanding safety, durability, and competency
questions towards closing the evidence and
competence gaps of engineered mass timber over
the next five years.
Also at the summit, industry leaders renewed their call on
the Government to introduce embodied carbon regulation
in construction. This would comprise, Part-Z, an industry-
proposed amendment, made to UK Building Regulations.
It would involve mandatory Whole Life Carbon
Assessments for building, along with a clear timeline and
targets for reducing emissions, ‘to help create a push
toward low-carbon materials and improve the
sustainability of the built environment’.
See: https://timberdevelopment.uk/government-commits-to-
increase-the-use-of-timber-in-construction/
German timber trade sales down 6% in 2024
According to a bulletin from Germany’s timber trade
association, GD Holz (Gesamtverband Deutscher
Holzhandel e. V) its monthly monitoring shows the
sector’s revenue fell 6% in 2024. Contraction was
experienced by companies of all sizes and across the range
of product areas.
Respondents to GD Holz’s trade survey said the decline in
sales was ‘primarily due to weak demand and only to a
minor extent to price effects’.
Looking at product types, it added that falling sales hit
nearly all major categories, with declines in line with the
overall average.
“Only timber and wood products for garden and other
outdoor applications were on a level with the previous
year,”the report says. “Planed goods and flooring sales
performed slightly better than the overall but still fell 3%
and 4.5% respectively.”
The industry’s services supply sector exceeded 2023
results with recorded a turnover increase of 7%, although
it accounts for just 2% of total German timber trade sales.
The consensus was that coming months are unlikely to see
any significant improvement. A third of the participants
expect further declining sales, and about half anticipate
sales remaining at the previous year's level for the first
quarter of 2025. Only 11% expect improved sales.
“The market environment for the timber trade will remain
difficult in 2025, due in part to the very low number of
new construction permits last year and the general
reluctance of consumers to buy,” concludes the GD Holz
bulletin.
However, it adds, there are some expectations of better
times in timber supply to decorative interior design,
refurbishment, and renovation – and a ‘boom time’ for
timber-based building in particular is expected when the
wider construction industry recovery sets in. GD Holz will
publish a more detailed analysis of German timber trade
trends later in March.
See: https://gdholz.de/news-aktuelles/umsaetze-im-holzhandel-
waren-im-jahr-2024-um-6-ruecklaeufig/
https://www.holzkurier.com/holzbau/2025/02/15--weniger-
neubauten-in-deutschland-.html
Thémis sustainable procurement data tool advances
The European Thémis certified sustainable timber
procurement data gathering tool and online platform for
trade federation members continues to grow and evolve.
The objective of Thémis, the Timber Market Survey, is to
assess the level of sustainable procurement by companies
and plot this over time. It enables federations to track
development in the volume of certified timber traded with
both domestic and foreign suppliers and to use the data to
set procurement goals and to target interventions to help
companies achieve them.
The collated data is analysed and presented in various
graphical formats on the Thémis online portal.
Thémis, which was launched in 2021 by Probos and IT
specialist Graphius, was backed by the Programme for the
Congo Basin Promotion of Certified Sustainable Forest
Management (PPECF), Dutch-based IDH-The Sustainable
Trade Initiative, and the Dutch Ministry of Agriculture,
Fisheries, Food security andNnature. It builds upon almost
two decades of work of Probos with the Netherlands
Timber Trade Association (NTTA) using a similar, but
more basic tool.
Data was first reported on Thémis in 2021 by the
Netherlands Timber Trade Association (NTTA), the
Netherlands Woodworking Industries Association
(NBVT), the French timber trade association Le
Commerce du Bois (LCB), Belgian wood, furniture and
textiles federation Fedustria, and the International Tropical
Timber Technical Association (ATIBT). Last year the
Danish Timber Trade Federation (DTTF) also came on
board. The organisations pay an annual fee to fund
Thémis maintenance.
Combined, the members of the federations using Thémis
have reported on 8.7 million cu.m of roundwood
equivalent timber traded in 2023. That number includes
over 1 million cu.m roundwood equivalent of tropical
timber imported into Europe
The data collected covers procurement of tropical
hardwood (comprising 11.8% of the volume total), tropical
wood-based panels (3.3%), other wood-based panels
(18.2%, temperate hardwood (2.6%) and softwood
(64.2%).
The ultimate objective of Thémis is to help drive up the
level of certified sustainable timber procurement among
users, which, says Probos, in turn can incentivise uptake of
certified sustainable forest management in supplier
countries.
It maintains that by demonstrating their environmental
commitment it can also enhance the reputation of timber
as a renewable resource originating from sustainably
managed forests. It can also boost the image of affiliated
federations and differentiate their members from non-
members in terms of commitment to sustainable forest
management.
For individual companies, says Probos, using Thémis
demonstrates their transparency on sustainable
procurement helping build buyer trust. And they can
download their annual results from Thémis in terms of
sourcing certified sustainable timber as a ‘declaration’.
Probos believes there is potential using the tool to
influence government policy in terms of sustainable
procurement. Further possible developments for the longer
term could include using the Thémis data collection tool to
collate information on the destination of timber, to identify
which markets are opting for certified sustainable and
which are doing less so.
The possibility is also being raised of developments to
engage producers with Thémis. A key driver for the
growth and development of Thémis is the need to develop
the market for verified sustainable timber to underpin
forest maintenance.
See: https://www.probos.nl/en/projects/sustainable-value-chains-
and-valuing-forest-ecosystem-services/2557-themis-the-timber-
market-survey
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