EY Forecast: Austrian Construction Industry Reaches Its Low Point in 2026

The situation in residential construction also remains tense: the number of building permits for residential buildings rose slightly last year from around 10,500 to 11,000, but remains well below the 23,000 permits issued in 2021. Real residential construction volume stood at around 27.5 billion euros in 2025 and is likely to remain at this level this year and in 2027. EY expects only a slight increase to 27.9 billion euros in 2028.

Causes: Costs, Financing, and Economic Conditions

A key reason for the weakness, according to EY, lies in the economic framework conditions. Fiscal consolidation and weak economic momentum have increased caution among investors, developers, financiers, and owners, delaying investment decisions. "Viele Projekte, die vor einigen Jahren noch kalkulierbar waren, rechnen sich heute nicht mehr oder nur unter deutlich veränderten Bedingungen," the analysis states.

In addition, construction and financing costs are rising. EY expert Ralf Seidenspinner, Senior Manager at EY Austria, gets straight to the point: "Kosten, Finanzierung und erwartbare Erlöse passen häufig nicht zusammen." Projects therefore fail not for lack of demand, but due to their lack of economic viability.

Renovations and Infrastructure as Pillars

Renovations have partially stabilized the market in recent years but have not been able to offset the slump in new building. Renovation volume stood at 15.4 billion euros in 2025, almost on a par with 2021 levels. In residential construction, renovations rose by 2.1 percent in 2025, with the renovation segment as a whole growing by 1.4 percent.

Infrastructure construction also shows a mixed picture: real volume grew from around 8.0 billion euros in 2021 to 8.6 billion euros last year. However, infrastructure volume is expected to decline again to approximately 8.1 billion euros by 2028. While the energy sector is projected to remain comparatively stable, declining volumes are forecast for roads, rail, telecommunications, and water.

Seidenspinner therefore warns that infrastructure alone cannot compensate for the weakness in residential construction: "Wenn der Wohnungsbau schwach bleibt, kann Infrastruktur das nicht auffangen." This means a key driver for a broad recovery of the entire sector is missing.

Outlook to 2028: Only Moderate Recovery

Overall, EY sees the construction industry more as being "in einer längeren Phase der Stabilisierung und Neuorientierung" than at the start of a new upswing. Although order backlog coverage in the construction trade rose to 15 weeks in the first quarter of 2026, up from 13 weeks in 2025, these are merely initial signs of stabilization.

For 2026, EY expects an overall slight decline in real construction volume of 0.3 percent. Only from 2027 should things gradually pick up again, with an increase of 0.7 percent. In 2028, a rise of 1.1 percent is expected, lifting total volume to around 52 billion euros. Over the period from 2025 to 2028, this corresponds to average growth of just 0.1 percent per year.

Total building construction volume is expected to rise to 43.9 billion euros by 2028, but will therefore remain "weit vom Niveau des Jahres 2021 entfernt." Seidenspinner sums up the mood: "Deshalb erholt sich der Markt deutlich langsamer, als viele Marktteilnehmende erhofft haben." As EY states in the analysis, a "kräftiger Aufschwung ist aber nicht in Sicht."

The industry expectation is therefore clear: instead of a cyclical upswing, Austria's construction sector faces a prolonged phase of stabilization, in which individual segments such as renovations and energy infrastructure provide support, but the broader market is unable to generate significant growth.