**EU Construction Output Falls as Cyprus Building Activity Remains Strong**
In a recent report by Eurostat, construction output across the European Union saw a decline in July, while Cyprus continues to demonstrate robust building activity. The seasonally adjusted construction production in the EU decreased by 0.3% in July compared to June, while output in the euro area remained unchanged.
This decline follows a more significant drop in June, where construction production fell by 1.3% in the EU and 1.5% in the euro area. Year-over-year comparisons reveal that construction production was down by 1.8% in the EU and 2% in the euro area in July 2026 compared to the same month in 2025.
Within the euro area, the data indicated that building construction remained stable month-on-month in July, while civil engineering activities saw a slight increase of 0.6%. However, specialized construction activities experienced a minor decline of 0.1%. In the broader EU context, building construction fell by 0.4%, civil engineering by 0.9%, and specialized construction activities by 0.2%.
Notably, Hungary faced the most significant monthly decline, with a drop of 4.7%, followed closely by Poland and Sweden, each recording a decrease of 3.8%. Austria also saw a decline of 2.2%. Conversely, Belgium reported the highest monthly increase in construction output at 2.8%, with the Czech Republic and Slovakia following at 2.1% and 1.9%, respectively.
On an annual basis, the euro area experienced a 6.4% decrease in building construction, while civil engineering rose by 0.6%. Specialized construction activities, however, saw a decline of 1.6%. The EU as a whole reported a 5.6% fall in building construction, a 0.4% decrease in civil engineering, and a 1.5% drop in specialized construction activities. Hungary again recorded the largest annual decline at 12.2%, with Spain and France also showing significant decreases of 9.7% and 5%, respectively. In contrast, Finland led the annual increases with a rise of 12.8%, followed by Slovenia at 11.6% and Bulgaria at 4.8%.
While Eurostat's July figures do not provide a comparable monthly production figure for Cyprus, local indicators suggest that the island's construction sector is thriving. According to the Cyprus Statistical Service (Cystat), 735 building permits were authorized in May, marking a substantial annual increase of 21.1%. These permits accounted for 352,126 square meters and included plans for 1,847 dwelling units.
In the first five months of 2026, Cyprus issued a total of 3,650 building permits, reflecting a significant 32.1% increase compared to the same period in 2025. The total value of these permits surged by 43.9% to €2.10 billion, while the authorized floor area expanded by 43.1% to 1.70 million square meters. Additionally, the number of planned homes increased dramatically by 63.7%, reaching 8,978 during this timeframe.
Despite the positive growth in building permits, the construction sector in Cyprus faces challenges, particularly concerning rising construction costs. Cystat reported that the construction materials price index rose by 3.39% year-on-year in August and increased by 0.07% from July. This rise in material costs presents a pressure point for developers and policymakers, especially as they navigate the expanding property market and address concerns over housing affordability and the availability of new homes.
Cystat is expected to release further insights into Cyprus' construction production and output price indices for the second quarter of 2026 on October 5. This forthcoming data will provide a more direct comparison with the broader European construction figures and may shed light on the ongoing trends within Cyprus' construction landscape.
As the EU grapples with declining construction output, Cyprus stands out with its strong building activity, reflecting a unique resilience in its construction sector amidst broader regional challenges.