In 2020, Austria’s GDP amounted to EUR 349.4 billion, exhibiting a 6.6% decline from the previous year. This also represents a 7.0% increase compared to the 2010 level (EUR 326.7 billion).
This decline was mainly due to the global COVID-19 pandemic, although the Austrian construction sector was only moderately affected by the crisis.
This is reflected in the number of enterprises in the broad construction sector. While it grew by 9.2% between 2010 and 2019, totalling 73,242, it slightly declined (‑1.1%) in 2020 reaching 72,403 (representing a 7.9% growth from 2010). This growth was mainly driven by the increase in the number of enterprises in the narrow construction (+25.0%).
Similarly, the volume index of production in the broad construction sector recorded an increase of 17.8% during 2015-2020, mainly driven by a 19.1% increase in the construction of buildings and a 11.8% growth in the construction of civil engineering, over the same period. However, it decreased by 5.4 percentage points (pps) from 23.2% in 2019 to 17.8% in 2020, thus reflecting the impact of the COVID-19 pandemic.
Reflecting the increased volume index of production, turnover in the broad construction sector marked a strong increase between 2010 and 2018 (+32.8%), reaching EUR 94.3 billion. It further increased to EUR 99.1 billion in 2020, marking a 39.5% rise since 2010. This overall increase was mainly driven by turnover growth in the narrow construction (+45.6%), real estate activities (+38.5%), architectural and engineering activities (+35.1%) and the manufacturing (+20.4%) sub‑sectors over the 2010‑2020 period.
Similarly, the gross operating rate of the broad construction sector, which is used to assess the profitability of the sector, stood at 16.9% in 2018, 0.7 percentage points (pps) lower than in 2010 (17.7%). This is above the 2018 EU-27 average of 16.7%.
In terms of employment, there were 520,287 persons employed in the Austrian broad construction sector in 2020, registering a 20.1% increase over the 2010 level (433,225 persons). This was mainly driven by the growth registered in the number of persons employed in the narrow construction sub-sector (+26.7%), followed by the real estate activities (+20.5%) and architectural and engineering activities (+15.2%) sub‑sectors over the 2010-2020 period.
Nevertheless, the Austrian construction sector also faces a few challenges, particularly related to labour and skills shortage. In fact, the job vacancy rate in the narrow construction sub‑sector increased from 2.3% in 2010 to 4.7% in 2020. According to a survey conducted by the Austrian Federal Economic Chamber (WKO) in September 2020, 47.7% of companies in the construction sector and building support trades sector are affected by a shortage of skilled workers.
Demand in the housing market is supported by declining interest rates on mortgage loans, rising household income and increasing numbers of households (+10.1% between 2010 and 2020). However, housing supply lags behind the demand, which translated in an increasing house price index (+36.3% between 2015 and 2020). Despite robust demand, construction activity is decreasing with the total number of dwellings approved for construction falling by 4.0% y-o-y (year-on-year) to 74,763 units in 2020. This may be partly explained by the COVID‑19 impact on the sector.
In August 2020, the EIB and Erste Bank (Erste Bank der oesterreichischen Sparkassen AG) entered into an agreement to provide EUR 300.0 million for social housing in Austria over the next three years. The agreement supports the construction of new subsidised or non-profit rental units.
In June 2021, the European Commission approved Austria’s Recovery and Resilience Plan (RRP) making EUR 3.5 billion in grants available. The plan focuses on combining reforms with large investments into the green and digital transitions, and addresses challenges brought about by the COVID-19 pandemic. Austria's plan dedicates 59.0% the total allocation to measures that support climate objectives. Moreover, around EUR 209.0 million has been allocated for the renovation of buildings.
Investment in the green transition is expected to contribute positively to the economic recovery with a GDP growth estimated to be about 1.5% in 2021 and to 4.7% in 2022. This economic recovery is expected to benefit the construction sector by providing further opportunities both in terms of business and technological developments.
To summarise, the Austrian construction sector has a positive outlook in the medium and long term. Excess demand for housing is expected to support investment in the construction sector, and investment in infrastructure projects are also likely to boost growth. Notably, infrastructure investments will mainly focus on railroad construction rather than roads, consistently with the climate protection stance took by the Austrian government.