Analyst: Strong Growth in Housing Construction Won't Be Sustainable in Long Term

Bratislava, 10 September (TASR) - The surprisingly strong growth in housing construction won't be sustainable in the long run, as the first half of the year failed to bring a sufficient increase in new housing starts that could help to keep construction activity going at a faster pace over a longer period, said UniCredit Bank analyst Lubomir Korsnak in a commentary on construction output data for July published by the Statistics Office on Thursday. "Following last year's signs of a recovery, the housing market is once again being cooled by higher interest rates, as well as by the negative impact of the fiscal consolidation package," he added. "For now, however, we don't expect a complete collapse of the housing market, as newly started construction and building permits at the beginning of the year might suggest. The coming months should, however, bring a noticeable correction in this segment of the construction sector. Lower activity should also be seen in the construction of non-residential buildings due to weaker corporate investments within the economy," said Korsnak. According to him, infrastructure construction appears to have already passed its peak. "The gradual completion of projects under the recovery plan is beginning to weaken its momentum, and although some of the projects that are nearing completion will be replaced by new projects financed from EU funds, significant short-term declines in output may be seen during the transition phase due to capacity reallocation," he said. "In addition, chronic problems in the construction of public infrastructure may still partially dampen or delay the positive effects of starting new public projects. We'll probably see more growth figures in the red within this smaller segment of the construction sector, especially in year-on-year comparisons. This decline could be temporarily mitigated, particularly around late summer and early autumn, by increased expenditure on repairs and maintenance due to the upcoming municipal elections," added Korsnak. The Statistics Office reported earlier on Thursday that Slovakia's construction output amounted to almost €805 million in July 2026, up 2.3 percent year-on-year (y-o-y) in fixed prices. This was the second slowest y-o-y rate of growth seen so far this year and one of the weakest increases for July in the past 14 years. However, the nominal value of construction work exceeded €800 million for the first time this year. Last year, this threshold was only surpassed in the final months of the year. Seasonally adjusted, construction output rose by 1.9 percent from June 2026. jrg/df