While the corona crisis has hit the Danish economy with severe restrictions and shutdowns over the winter, the construction industry has continued to prosper. 2022 will be particularly marked by high activity in the renovation area.
Usually, the construction industry is very cyclically sensitive, where activity goes hand in hand with economic development. Therefore, it is gratifying that the construction and civil engineering investments actually grew since 2020 and helped to keep the Danish economy afloat during the corona crisis. There is a very high demand for housing, and the supply is increasing through new construction - and now construction is also underway in the catchment area for the larger cities.
A record number of homes are being built
Housing investments in Demark, which make up almost half of the total construction and civil engineering investments, are expected to grow by 3.5% in 2022. This is despite the fact that housing investment has increased considerably in recent years, partly as a result of strong population growth in the larger cities, which has created a high level of activity in new construction.
The increase of renovation invesmets will continue to form a solid foundation for activity in the construction industry. Amongst other things, this is due to a record number of home sales, where renovations are often made in connection with purchases or sales, as well as a generally greater focus on energy renovations. At the same time, the historically low interest rate level and rising house prices have increased the deductible for many of the country's homeowners.
High demand and supply challenges
Nevertheless, the industry is being challenged by rising prices on a number of important building materials, which are due to a combination of supply challenges due to the corona crisis, rising protectionism, increased transportation costs and a massive demand from China. If the prices of materials continue to rise, it may have an effect on the price per square meter, but how much it will have an effect in the long run depends on how long the price increases last. As the global society becomes more normalised, the backlog in production as a consequence of the corona crisis will be overtaken, and thus a damper will probably be put on material price increases. The high material prices are therefore not expected to have a significant effect on construction activity in the long run.
Over the past year, after the corona crisis hit Denmark, a number of political initiatives have been implemented to support the construction industry. This applies, for example, to the doubling of the Housing Job Scheme in 2021 and the Building Pool4 (which aims to encourage more homeowners to make their homes more energy efficient). Thus, the construction industry in Denmark continues to prosper.