There will be a strong downturn in the rest of 2009 until the middle of 2010 and a slight improvement is not expected until 2011 in many countries, says the report from EuroConstruct, a forecast group of 19 European research institutes.
The situation in the residential property market is described as 'a deep crisis' and is a direct result of the turbulence in global financial markets, says the report.
The rapid limitation of mortgage loans has created huge problems for residential property developers and led them to freeze new property starts. In the non residential sector it is financing that has caused the headaches. A lack of new investment transactions has caused many significant projects to be stopping or delayed.
Infrastructure construction financed by public sources and supported by Governments is the most resistant sector of the crises.
The report predicts that the apartment sector will suffer the most with an overall 19.7% decrease in the construction of flats in 2009 compared with 2008. The hardest hit country is likely to be Ireland, down 60.8%, followed by Spain, down 42%, Denmark down 40% in Denmark and Sweden and Portugal down 30%.
The decline will affect other markets and lead to a decreased demand for workers in the construction sector and for building materials. For example demand for cement could drop by 20 million tons.
But in Eastern and Central Europe a number of large infrastructure projects and demand for new residential apartments tells a different story. Demand continues particularly in Poland and the Slovak Republic.
In contrast countries like Spain are likely to see a decline for some time to come. The report predicts that the property crisis is unlikely to bottom out until 2010 and the Spanish construction sector, which shrank 17% in 2008, will fall another 18.7% in 2009, some 6% in 2010 and then see zero growth in 2011.
Residential property will be hardest hit in Spain, falling by 42% in 2009 and 12% in 2010.
