Overall construction activity
Overall, construction is expected to have contracted slightly in 2023 (-0.3%) as a result of the difficulties associated with the persistently high construction costs and the level of interest rates. These have had a significant impact on the residential sector.
Material prices remain high, but they are no longer rising, and the same goes for interest rates, which have even started to fall. As a result, they should no longer act as a further brake on housing demand and may even allow some recovery in this area. However, the sharp fall in building permits in 2023 will continue to weigh on new housing activity in 2024.
On the other hand, the stimulus packages are having a positive effect, the size of which will depend on the timing of their implementation. In principle, they should continue to strengthen in 2024, supporting growth, as should local government investment ahead of the local elections in October 2024.
Overall, the outlook for construction in 2024 is for weak growth (+0.2%).
Housebuilding
New residential construction falls sharply in 2023 (-7%), taking into account the significant decline in the number of dwellings approved. This decline (-10% in 2022), largely due to the rise in construction costs and interest rates, continued in 2023 (-7%) but seems to have come to an end, with some recovery expected in 2024. However, given the lead times for both building starts and construction, this will not be enough to bring about a recovery in activity from 2024 onwards. The volume of work in progress in 2024 will be heavily influenced by the number of dwellings approved in 2023 (which will be much lower than in 2022). As a result, activity is expected to fall by a further 5% or so.
Activity in the housing renovation sector continues to grow in 2023 (+1.0%). A final boost from the stimulus packages and the introduction of an energy renovation obligation in Flanders have more than offset the difficulties related to prices and interest rates in 2023, as well as the impact of the reduction in reconstruction work. In 2024, the economy should return to stronger growth (+1.6%) in a context where price and interest rate developments are expected to be more favourable.
Non-residential construction
Non-residential renovation will grow by 1.3% in 2023, driven by its own momentum and the start of the stimulus plans. The intensification of work linked to the economic stimulus plans, which concern in particular the renovation of public buildings, has compensated for the partial completion of the renovation plan for Walloon hospitals. In fact, the completion of this plan should lead to a decline in activity in this segment in 2024 (-2.5%).
New non-residential construction seems to be coming to the end of a period of decline, although it will still fall by 2.8% in 2023 as a result of the fall in building permits issued earlier. The increase in building permits issued in 2023 suggests a recovery in activity in this sector (+1.6% in 2024). This is despite the fact that Belgian companies are currently allocating less of their total investment to new buildings than in the past.
GDP 2023
BILLION
POPULATION 2023
Total investment in construction in 2023
BILLION
Civil engineering
Activity is estimated to increase by 4.9% in 2023, thanks to a combination of three favourable factors for activity in this segment. The effects of the recovery plans and the reconstruction of the areas affected by the floods in the summer of 2021, and the intensification of municipal investment in the run-up to the local elections in October 2024. The sector is also benefiting from a certain revival of interest in public investment on the part of the authorities and support for a number of major projects, most notably the Oosterweel project.
The Oosterweel project will support not only civil engineering activity but also growth in 2024, as it is still in an intensification phase. As will the work related to the economic stimulus packages. The civil engineering sector can therefore a priori expect growth of more than 3.9% in 2024, provided that the projects underpinning this growth do not fall behind schedule.
Prices of construction materials
After the sharp increases in 2020-2021, material prices broadly stabilise (at a high level) in 2023. On average, they increase by 2.5% at the beginning of the year and then remain stable. On an annual average, however, the increase appears to be larger, as in 2022 prices at the end of the year are much higher than at the beginning.
However, this average trend hides large differences between the trends for the different materials. For example, the price of glass and terracotta materials increased by more than 10% in 2023. Conversely, the price of wood and metals will fall by 10% in 2023.
The figures for the first two months of 2024 indicate a stabilisation that is becoming more widespread, a trend that will of course have to be confirmed during the rest of the year.
Per cent variation of investment in real terms of previous year
Number of building permits in residential construction
