Residential Building in the Nordics: First Signs of Recovery – Finland Remains the Weak Spot

Residential building in Denmark, Sweden, Norway, and Finland have suffered significantly from declining demand in recent years. Since 2022, all four countries have seen sharp drops in building permits, housing starts, and completions. Current data and forecasts, however, indicate that market conditions improve and that at the same time, developments are increasingly diverging across the region.

Permits: Recovery in Denmark and Sweden, continued weakness in Finland

Permits for residential buildings are showing initial positive signals. Denmark recently showed growth in issued permits, as did Sweden, where permits increased by around 9% year-on-year in 2025. In Norway, developments have remained largely stable, without clear growth momentum.

Finland, by contrast, continues to lag behind. Permits there declined again in 2025 by roughly 13%, indicating that the crisis in Finnish residential market is far from over. While forecasts point to rising numbers of permits across all four countries by 2026, Finland’s starting level remains very low.

Housing starts: Strong momentum in Sweden, moderate recovery in Norway

The development of housing starts reflects the delayed impact of building permits. In Denmark, residential construction starts are expected to increase by around 11% in 2025. Sweden shows the strongest recovery, with housing starts projected to grow by approximately 23%. In addition to new permits, projects approved in previous years but not yet realised are now being realised.

Norway is also expected to see a modest increase in housing starts of around 4%. Finland once again stands apart: housing starts remain weak due to the very low number of permits issued in recent years, leaving little room for short-term recovery.

Completions: Trough in 2025, cautious recovery from 2026

The impact of the downturn is particularly visible in residential completions. All four countries experienced significant declines in completions in 2023 and 2024. The year 2025 is also expected to remain weak, as the sharp drop in permits in previous years continues to feed through.

From 2026 onwards, a cautious recovery is expected. In Denmark and Sweden, completions in residential building are forecasted to increase by around 6%. Norway is likely to remain broadly stable, while Finland is expected to see another decline, further widening the gap to the other Nordic markets.

Dwellings completed per 1,000 inhabitants: Still well below pre-crisis levels

Looking at the number of completed dwellings per 1,000 inhabitants highlights the depth of the downturn. Although the Nordic countries were still well above the German benchmark of 2.6 dwellings per 1,000 inhabitants in 2023, construction activity has since fallen sharply.

In Denmark, the figure dropped from 6.5 in 2023 to 4.2 in 2025, marking the current low point. By 2028, it is expected to recover to approximately 4.8. Sweden follows a similar pattern: after reaching 7.4 dwellings per 1,000 inhabitants in 2023, the figure fell to 3.8 and is projected to rise again to about 4.4 in the medium term.

Finland experienced a particularly steep decline, from 7.3 to 2.7 dwellings per 1,000 inhabitants, with only a slow recovery expected. Norway remains at a lower level overall but is also showing initial signs of gradual improvement.

Conclusion: A divided picture across the Nordic region

Overall, early signs of recovery are emerging in Nordic residential market, particularly in Denmark and Sweden, where rising permits, housing starts, and increasing completions from 2026 onwards are expected. Norway is in a transitional phase, showing moderate stabilisation. Finland, however, remains the clear laggard: the crisis persists, and a sustainable recovery is not expected before 2027, according to B+L forecasts.