Austria's Construction Industry Likely to Hit Rock Bottom by 2026

Austria's construction sector is bracing for a challenging period, with a new forecast predicting the market will reach its lowest point in 2026. The "EY Parthenon Bauprognose Österreich 2026" suggests that real construction volume will decrease from 58.7 billion euros in 2021 to an estimated 51.7 billion euros by 2026. This represents a nearly 12 percent real loss in volume since 2021.

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The good news is: the market is approaching its low point. The bad news is: that doesn't mean a real recovery yet.

The slowdown is particularly acute in new residential construction. While renovations have provided some stability, they cannot compensate for the sharp decline in new housing projects. Experts note that the current cost, financing, and regulatory conditions are making it difficult for new projects to be economically viable. "The good news is: the market is approaching its low point. The bad news is: that doesn't mean a real recovery yet," stated Elisabeth Sardy-Rauter, Director of Real Estate Consulting at EY Austria.

The high-rise construction segment is experiencing the most significant impact, with real volume projected to drop from 50.6 billion euros in 2021 to 43.3 billion euros by 2025, and a further slight decrease expected in 2026. A modest recovery is not anticipated until 2027, with growth rates of 0.7 percent and 1.1 percent projected for 2027 and 2028, respectively.

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Need alone does not build apartments. What is decisive is whether projects can again be presented economically under the current cost, financing, and framework conditions.

Ralf Seidenspinner, a Senior Manager at EY Austria, highlighted that many construction projects are currently failing not due to a lack of demand, but because they are not economically feasible. "Costs, financing, and expected revenues often do not align," he explained. The new construction segment within high-rise building is identified as the central weak point, with real volume falling from 35.4 billion euros in 2021 to an estimated 27.9 billion euros in 2025.

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Many construction projects are currently failing not due to a lack of demand, but because they are not economically feasible. Costs, financing, and expected revenues often do not align.