Berlin, Aug 2 : The number of completed dwellings residential units across Europe is set to decrease significantly, with 1.6 million units predicted by the end of 2024, an 8.5 per cent drop from the previous year, according to the IFO Institute for Economic Research.

Germany is expected to experience an even sharper decline, with a 15 per cent reduction in completed housing units, IFO on Thursday cited the EUROCONSTRUCT forecasting network as saying.

"European residential construction is being hit hard by higher interest rates and reduced purchasing power," Ludwig Dorffmeister, a construction expert at IFO explained. "In Germany, the situation is exacerbated by significantly inflated construction costs."

The downturn in residential construction is more pronounced in the Nordic countries. Finland and Sweden are projected to see their number of complete housing units roughly halved this year. Norway fares somewhat better, with an expected decline of 22 per cent.

In contrast, some positive trends have been observed in other parts of Europe. Poland is anticipated to see a four per cent increase in housing completions, Ireland 10 per cent, and Spain 15 per cent, Xinhua news agency reported.

"In Spain, while construction activity will remain at a low level, more than 100,000 housing units could be completed in 2025 for the first time since 2012," Dorffmeister added.

In 2024, new construction is expected to play a less prominent role in the residential sector, with its share dropping to 37 percent, down from 58 percent in 2006. "The focus is increasingly shifting towards maintaining and modernizing existing living spaces," Dorffmeister noted.

Despite these challenges, experts predict stable demand in the civil engineering sector. "Expanding and enhancing the quality of infrastructure remains a continuous priority in all countries," Dorffmeister said.

He emphasised that the necessary funding for these projects will come from relatively stable sources, including multi-year national investment funds and EU financing.

/IANS