After a difficult 2023, this year promises to be another challenge for the construction sector in Belgium. The sector blames the Federal Government for removing favourable conditions for demolition and reconstruction.
Construction was already struggling in 2023 and 2024 promises to bring little improvement, sector federation Embuild's recent survey showed. More than half (57%) of construction and installation companies have noticed a drop in the number of enquiries from potential clients since the last quarter of 2023.
One in four (24%) is even experiencing a very sharp decline and if the situation does not turn around soon, 15% of construction companies expect to have to lay off one or more employees, the survey showed.
The construction industry has 134,000 companies in our country, employing 210,000 workers, meaning financial challenges in the sector could have dire consequences for the employment rate.
'Counterproductive measures'
The situation will likely be further complicated by the rollback of the 6% VAT for non-private demolition and reconstruction projects since the beginning of this year.
"This will lead to profitability problems and a decline in construction projects, while we need the opposite to alleviate the housing shortage," said Niko Demeester, managing director of Embuild.
The sector blames the Federal Government for the difficulties it will face. It called the measure counterproductive and wants the intervention to be reversed.
"Large projects are necessary for the expansion and renewal of the significantly outdated housing stock," said Demeester. "Individual demolition and rebuilding is certainly positive, but far from sufficient to meet the climate and demographic challenges."
However, residential construction and home renovation will also decline in 2024. In housing construction, only 17% expect improvement this year, while 42% expect a worse 2024 and 10% even expect a much worse 2024.
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A similar story in housing renovation: 20% of firms expect improvement this year, 32% say 2024 will be worse and 6% much worse. "So even with mortgage rates stabilising, consumer demand to invest in construction or renovation remains underwhelming."
Demeester argued that now is a good time to build or buy and renovate a home. "In the cooling property market, houses and building plots can again be purchased at a correct price. The price spike for building materials is also behind us. In other words, the stars look favourable for investing in building and renovation."
