Sweden: Signs of Stabilisation and Recovery in the Construction Sector

Marcel Dresse by Marcel Dresse
NO
18.02.2026

Several developments in Sweden point to an optimistic outlook for the construction industry in 2026. In 2025, the number of insolvencies among construction companies declined by 5% on average. According to the industry association Byggföretagen, smaller companies in particular continue to struggle with the consequences of the downturn in recent years. Regional differences remain evident: insolvencies decreased significantly in Norrbotten, Värmland and Södermanland, while figures in Stockholm, Uppsala and Skåne showed only slight declines or stagnation. Despite the recent improvement, the overall level of insolvencies remains substantially higher than in the pre-crisis years, following a marked increase in 2023.

At the regulatory level, the Swedish government is currently discussing legislative initiatives aimed at reducing administrative burdens for construction companies. Proposed measures focus in particular on simplifying requirements for renovations and refurbishments, as well as streamlining procedures for the construction of public buildings in the correctional sector. These initiatives are intended to improve planning certainty and reduce project delays.

Residential building showed clear signs of recovery in 2025. Building permits and starts developed positively, indicating a reversal of the previous downward trend. As a result, residential construction investments and completions are expected to increase in 2026. Investment in residential building already recorded slight growth in 2025.

Renovation activity also contributed to this stabilisation. Regulatory adjustments to the ROT tax deduction (Reparation, Ombyggnad, Tillbyggnad) provided additional support. The ROT scheme grants a direct tax reduction of 30% on labour costs for repair, renovation and extension works, up to a maximum of SEK 50,000 per person per year. This incentive has strengthened demand for refurbishment projects.

For 2026, B+L expects investment to grow in both, the construction of buildings and civil engineering. However, non-residential construction is likely to develop more weakly than the residential sector.

Overall, while structural challenges remain—particularly for smaller firms—the Swedish construction industry is entering 2026 with improving fundamentals and growing investment momentum.