Residential construction remains under pressure
In the first half of 2024, turnover in the main construction sector stagnated at CHF 11 billion, while incoming orders declined slightly. Residential construction in particular is struggling with considerable challenges, while public civil engineering is benefiting from rising demand. The industry has mixed feelings about the rest of the year and does not expect a possible recovery in residential construction until 2025.
The main construction industry in Switzerland achieved stable turnover of CHF 11 billion in the first half of 2024, which corresponds to the previous year’s level. Despite this stable result, there are some worrying trends in the details. Incoming orders have fallen slightly, which has hit residential construction particularly hard. At CHF 3.6 billion, turnover in residential construction was CHF 100 million or 3 per cent below the figure for the same period last year. Commercial construction was also unable to decouple itself from the weak economy and recorded a decline of 6 per cent.
Public construction gains momentum
By contrast, a positive trend can be seen in public construction. Driven by population growth, public civil engineering increased by 3 per cent, while public building construction recorded an increase of 1 per cent. Private civil engineering also experienced a pleasing development with an increase of 5 per cent. This growth reflects the increasing demand for infrastructure such as railways, roads, hospitals and schools, which must be met by the growing population. However, there is still a considerable need to catch up, particularly in the area of motorways. This is illustrated by the many hours of congestion on motorways and roads. The Swiss Association of Master Builders (SBV) therefore supports the STEP proposal to optimise the motorway network, which will be put to the vote in November 2024.
Difficult times for residential construction
Residential construction continues to face major challenges. In the second quarter of 2024, construction activity fell by 10 per cent, while new orders fell by 7 per cent compared to the same quarter of the previous year. Despite a slight increase in residential construction applications in the first half of 2024, a recovery is not expected until the second half of 2025 at the earliest. The SBC expects only around 40,000 new flats to be built in 2024 as a whole, although at least 50,000 would be needed to meet demand. The vacancy rate has continued to fall, further increasing the pressure on the housing market.
Outlook: Uncertainties remain
Forecasts for the 2024 construction year remain cautious. Total turnover in the main construction industry is expected to be CHF 23 billion, which corresponds to a decline of 1.6 per cent compared to the previous year. The construction index predicts that construction activity will also stagnate in the first half of 2025, similar to 2023 and 2024, with turnover of CHF 11 billion again.
The Swiss construction industry faces the challenge of meeting the complex needs of the market while at the same time coping with economic pressure. It remains to be seen whether the measures to revitalise residential construction and infrastructure expansion will bear fruit in the long term.