The Swedish Construction Market in 2025: “Great Opportunities Despite Challenges” Chief Analyst at Byggfakta/Citymark
31 January 2025
Despite some challenges, chief analyst Tor Borg remains cautiously optimistic about the Swedish construction market in 2025.
“Several key drivers are creating opportunities for the industry, ranging from a stabilizing housing market to increased investments in energy and public projects. However, challenges remain, particularly in financing and housing construction, which is showing a slight upward trend but still remains at historically low levels.”
As chief analyst at Byggfakta/Citymark, Tor Borg has access to extensive data on industry trends. Encouragingly, he sees several positive signs that will shape 2025.
“We are entering 2025 with a more stable housing market, major investments in energy and industry, and continued public investments,” he says.
A cautiously improving housing market
After several years of uncertainty in the housing market, the outlook is now brighter, although levels remain low from a historical perspective.
“Interest rates have stabilized, giving both buyers and builders better planning conditions. We are also seeing the effects of several political measures, such as support for new construction and simplified building regulations. This is a positive development, but it’s important to remember that we are still far below previous peak levels,” says Tor Borg.
Pointing to the figures, he notes that housing construction has increased from around 25,000 to a forecasted 30,000 housing starts this year. While this is an improvement, it is still far from the approximately 70,000 dwellings built annually just a few years ago.
Investments in energy and industry
The energy sector and the green industrial transition are two areas with strong growth, but there are also obstacles to overcome.
“We see enormous investments in sustainable energy and industry, particularly in northern Sweden. Wind farms, battery factories, and hydrogen production are at the center, while critical infrastructure such as power grids and transport solutions are being expanded to support these projects,” Tor explains.
At the same time, he highlights that many industrial projects are facing major financial challenges.
“The global capital markets are difficult right now. Interest rate hikes and tighter lending conditions make it more challenging to secure funding for the large projects that are needed. This is something that risks delaying progress,” he says.
Public investments
Public investments continue to be an important part of the construction market, but with shifting priorities.
“Infrastructure and welfare investments are keeping the construction market stable, but we are also seeing changes. For instance, a lot of new prisons are currently being built to meet growing demand. At the same time, the number of school-aged children is decreasing in many parts of Sweden, which means some schools may need to be repurposed or even demolished,” says Tor.
He links this to demographic trends, where Sweden’s birth rates are too low to maintain current student numbers.
“This is an important reminder that public investments must align with population trends. At the same time, it creates opportunities to rethink and adapt facilities for future needs,” he concludes.
