Construction Prices 2024 in Austria: Moderate Increase Despite Tense Situation in the Construction Industry
Construction prices in Austria rose moderately by 1.3% in 2024 compared to the previous year. This was announced by Statistics Austria in its latest report. While price increases eased over the year, the economic situation in the construction industry remains challenging. Residential construction in particular is suffering from high construction and financing costs, which could have a long-term impact on the labor market and future housing supply.
Statistics Austria reports moderately increased construction prices in 2024, with an average increase of 1.3% year-on-year, but slightly flattened towards the end of the year with a 1.2% inflation rate. / Picture: © Wien Energie
The construction price index reached 123.1 points in 2024 (base year 2020: 100 points). At 1.6%, the increase was particularly pronounced in building construction than in civil engineering, which only recorded an increase of 0.9%. Within building construction, the “other building construction” category recorded a price increase of 1.9%, while residential and housing construction became 1.3% more expensive.
In civil engineering, prices developed differently: while road construction rose by 1.2% and bridge construction was 1.3% more expensive, the increase in other civil engineering was significantly lower at 0.5%.
Differentiation between construction price and construction cost index
It is important to distinguish between the construction price index and the construction cost index. While the construction cost index primarily reflects the development of material prices and wages, the construction price index also considers changes in productivity and the profit margin of construction companies. The current trend shows that price increases have been moderate despite expensive building materials and higher wage costs, which indicates a slight easing in the competitive environment in the construction industry.
General economic conditions and prospects
Despite the comparatively low price increases, the construction industry remains difficult. The Austrian Institute of Economic Research (WIFO) is forecasting a real decline in value added of 3.5% in the industry in 2024. Building construction in particular, especially residential construction, is struggling with a combination of high financing costs, stricter lending criteria, and reduced investment.
The effects of these developments can already be seen in the labor market. While the shortage of skilled workers has worsened in recent years, there is now a threat of a decline in employment in the sector. Many companies are reporting falling demand for construction projects, particularly in private residential construction. Even public investment has so far only been able to offset this trend to a limited extent.
Political measures and industry demands
The construction industry is therefore increasingly calling for measures to stabilize the sector. Among other things, experts are proposing a relaxation of lending guidelines and targeted subsidies for residential construction. Tax incentives, for example in the form of accelerated depreciation or a reduction in real estate transfer tax, could also boost investment.
Furthermore, the public sector has a responsibility to take countermeasures through infrastructure projects and housing subsidies. Particularly in metropolitan areas, where the housing market is already under pressure, targeted investments could help boost new construction and secure affordable housing in the long term.
Construction prices in Austria rose only moderately in 2024, but the industry is facing major challenges. Residential construction in particular is affected by falling demand, which could have a long-term impact on the labor market and housing supply. The coming months will show to what extent political and economic measures will take effect and whether the construction industry can return to a more stable growth path.