COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS The European Strategy for Housing Construction: a more competitive and productive construction industry
Date: 2025-12-16
Institutions: Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, European Commission
Subjects: administrative formalities, building industry, competitiveness, digitisation, distribution of EU funding, housing policy, innovation, sustainable development, technical standard, vocational training

EN 

  EN 

   EUROPEAN COMMISSION  Strasbourg, 16.12.2025  COM(2025) 991 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS The European Strategy for Housing Construction: a more competitive and productive construction industry  
 
 
1  Strengthening the competitiveness of the construction 

ecosystem  

Europe is facing a structural challenge of housing affordability. The European Strategy for 
Housing  Construction  is  an  essential  part  –  the  industrial  pillar  –  of  the  Commission’s 
Affordable Housing Package, which aims to make housing more affordable for all Europeans. 
The Strategy focuses on strengthening the competitiveness, productivity and innovation in the 
construction industry.  While  harmonised rules  for construction products  and services in  the 
Single Market contribute to an EU framework, housing remains primarily a competence and 
responsibility  of Member  States,  regions  and  cities.  A  concerted  effort  by  EU  institutions, 
national, regional, and local governments, financial institutions, and industrial stakeholders is 
therefore key to address the housing issue. 

The  housing  crisis  is  driven  by  several  factors,  including  some  in  the  construction 
industry. Shifts in  demand,  limited  housing  supply,  rising  construction  costs  and  persistent 
productivity  gaps  have  contributed  to  a  housing  shortage.  In  one  third  of  the  EU  regions, 
construction did not manage to keep up with expanding demographic demand. Commission 
projections suggest that household numbers will increase further in those areas. To cater for 
this demographic pressure in the next decade, Europe will need to add 650,000 dwellings per 
year in addition to the 1,6 million built currently1. A doubling of the current rate of renovations 
and an overall improvement of the energy performance of the residential building stock, by 
16% by 2030, is also needed to contribute to the supply of affordable, sustainable, resilient and 
quality housing. 

The  housing  shortage  is  reflected  in  rising  prices  for  both  rental  and  owner-occupied 
dwellings. Since 2013, house prices in nominal terms have increased by more than 60% across 
the EU, growing faster than income, with direct implications for social inclusion and labour 
mobility.  Many  metropolitan  areas  and  touristic  destinations  are  stress  areas,  facing  the 
strongest pressures.  

To address this challenge of housing affordability, the European Union must address the 
gap  between  supply  and  demand  of  housing,  next  to  other  measures  as  included  in  the 
Affordable  Housing  Plan2.  We  need  to  create  the  framework  conditions  to  ensure  that  the 
construction sector can play its role as enabler of affordable, sustainable, resilient and high-
quality  housing.  Increasing  the  productivity,  capacity  and  competitiveness  of  the  whole 
construction  ecosystem3  will  allow  to  boost  housing  supply  and  deliver  on  the  Union’s 
economic, social and environmental objectives. 

In  addition  to  its  important  role  of  supplying  quality  housing  for  European  citizens, 
the construction  ecosystem  is  an  important  contributor  to  the  European  economy  and 
growth; it is among the three largest industrial ecosystems in the EU. It is dominated by 
SMEs, mainly micro-firms, which account for 99% of the active companies. It spans a complex 
and  interdependent  value  chain,  from  raw  materials  and  construction  products  to  design, 
engineering,  construction,  renovation  and  building  maintenance.  A  significant  part  of  the 
ecosystem operates within the public sphere, through public procurement of works and civil 

1 See Balouktsi et al. (2025) “Housing investment needs in the EU”. JRC Science for Policy Brief 
2 Com(2025) 1025 -  Homes for all – The European Affordable Housing Plan 
3 Definition and details on the ecosystem structure: swd-annual-single-market-report-2021_en.pdf  

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engineering and social housing investment. With 6.6 million companies, it provides jobs for 
more than 27 million people and adds 12% to the EU gross value added4.  

However, the ecosystem’s current performance remains below potential. Of all industrial 
sectors,  construction  has  experienced  the  greatest  decline  in  productivity  since  2019. 
Construction costs have risen faster than inflation, driven by high material and labour costs that 
have not been offset by efficiency improvements. Moreover, this industrial ecosystem remains 
the least digitalised in Europe, with only 55% of firms using advanced digital technologies, 
compared to a 76% average in the other ecosystems5. Fewer than 10% of companies plan long-
term investments in digital transformation. Labour productivity per hour in construction has 
declined by 8% since 20196, while the EU economy as a whole has recorded modest gains. 
industrial 
This productivity  gap  has  undermined  both  housing  affordability  and 
competitiveness.  

At  the  same  time,  the  construction  sector  has  a  huge  potential  to  reduce  emissions.  It  is 
responsible  for  over  35%  of  the  EU’s  waste  generation  and  5-12%  of  total  national  GHG 
emissions 7.  The  use  of  low-carbon  and  bio-based  construction  materials  can  help  reduce 
embodied carbon8 in buildings by about 40% 9. Stepping up the renovation of our existing 
building  stock  is  essential  to  further  reduce  our  dependence  on  fossil  fuels,  reduce  our 
greenhouse gas emissions and improve our air quality. 

The key challenge that needs to be addressed is reducing the costs for all stakeholders 
operating within the construction ecosystem. For this, we need a simplification measures, 
delivered  by  increasing  digitalisation  across  the  value  chain,  and  reducing  administrative 
burden for all actors involved. In addition, we need further harmonisation of rules to bring the 
compliance costs down, in particular through acceleration of standardisation. The Commission 
and national competition authorities will remain vigilant with respect to any anti-competitive 
practices in the sector. 

There  are  many  levers  to  increase  the  competitiveness  of  the  construction  ecosystem. 
Lowering administrative burden and speeding up permitting procedures can accelerate delivery 
of construction works in both private and public housing markets. The scaling up of innovation 
and the uptake of new technologies will pull micro-enterprises into the flow of digitalisation 
and increased productivity. Increased market penetration of innovative construction products 
and methods can boost productivity and allow scale. The development of markets for circular 
materials  and construction  waste  will  increase  access  to  inputs  and  increase  resilience.  The 
demand for skilled workers in the value chain, including for skills related to digitalisation and 
automatisation, will likely lead to an improved image of the sector as a place  to work, thus 
attracting  more  women  and  young  people.  Lastly,  addressing  the  persisting  regulatory 
divergences will support the creation of a true Single Market in construction and installation 
services.  

We  need  to  take  action  in  four  priority  areas  to  unlock  the  full  productivity  potential 
of the construction ecosystem: 

•  Simplifying and digitalising residential permitting and administrative procedures; 

4 Industrial ecosystems indicators dashboard (based on Eurostat) 
5 Investment Survey 2024, European Union Overview (EIB 2024) 
6 European Central Bank 
7 Buildings and construction - Internal Market, Industry, Entrepreneurship and SMEs 
8 BIOBUILD Project - Thermal Solutions for Green Buildings 
9 Paving the way for lowering embodied carbon emissions in the building and construction sector | Clean Technologies and 
Environmental Policy 

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•  Supporting innovation and scaling up in construction to deploy innovative products 

and new technologies at scale within the Single Market; 

•  Securing  access  to  raw  and  secondary  materials  to  ensure  stable,  affordable  and 

sustainable material supply; 

•  Ensuring access to services and skills by tackling shortages, removing barriers to cross-

border service provision and promoting mobility of professionals and workers. 

This  Strategy  builds  on  the  recent  modernisation  of  the  Construction  Products  Regulation 
(CPR)10. Standards adopted under the CPR, in  line with  CPR  Working Plan for 2026-2029 
published  today11,  will  be  key  to  support  harmonisation  throughout  the  Single  Market.  It 
delivers  on  the  objectives  of  the  Single  Market  Strategy12  and  the  Construction  Transition 
Pathway13  recommendations  towards  achieving  a  greener,  more  digital,  resilient  and 
competitive construction ecosystem.  

2  Simplifying and digitalising the ecosystem 

To unlock the full potential of the construction ecosystem, we first need to look at how we 
make  it  easier  and  faster  to  operate  for  all  actors  involved.  The  complexity  and 
restrictiveness of the legal framework and the low uptake of digitalisation need to be addressed 
with priority. 

The  development  and  construction  of  housing  is  subject  to  rules,  which  take  many  forms, 
including  building  codes,  land  use  and  zoning  policies,  and  environmental  standards.  The 
majority of rules that influence housing supply are set by Member States, including at regional 
and  local  levels.  These  rules  preserve  our  safety  and  quality  of  life,  promote  social  and 
economic  objectives,  and protect  our  environment  and  cultural  heritage.  However,  their 
accumulation,  complexity  and  fragmentation  often  lead  to  important  restrictions,  expenses, 
delay  and  uncertainty,  which  increase  the  total  cost  of  construction.  The administrative 
complexity often results in unintended restrictions to the supply of housing.  

Complex,  restrictive,  slow  and  uncertain  permitting  procedures  further  contribute  to 
driving up housing construction costs and limiting the overall output of the construction, both 
for new buildings and renovations14. While building permits play an essential regulatory role 
by  ensuring  compliance  with  the  multi-layered  regulatory  framework15,  their  complexity, 
fragmentation and multiplication create inefficiencies, discourage investment and hinder the 
adoption of innovative construction methods such as offsite manufacturing and 3D printing16.  

10 Regulation (EU) 2024/3110 of the European Parliament and of the Council of 27 November 2024 laying down 
harmonised rules for the marketing of construction products and repealing Regulation (EU) No 305/2011  OJ L, 
2024/3110, 18.12.2024, ELI: http://data.europa.eu/eli/reg/2024/3110/oj  
11 COM(2025) 772 
12 The Single Market: our European home market in an uncertain world A Strategy for making the Single Market 
simple, seamless and strong – Communication from the European Commission, COM(2025)500 
13 Transition Pathway for Construction, SWD European Commission (2023) - DocsRoom - European Commission 
14 B-Ready in the EU   
15  Other  permitting  procedures  may  apply:  a  zoning  permit  to  allow  for  a  specific  function  to  be  developed, 
an allotment permit for dividing a piece of land into plots, an environmental permit for large developments, or 
an operating permit allowing a specific economic activity  
16 https://doi.org/10.1080/09613218.2024.2400467 

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The  challenge  therefore  lies  in striking  the  right  balance  between  necessary  oversight, 
conditions and restrictions, and procedural efficiency. 

Project developers across the EU face multiple challenges during the permit application 
process  for  residential  buildings17.  National  and  local  regulations  are  often  fragmented 
and complex,  with  no  clear  deadlines  for  public  authorities  to  respond.  Applicants  are 
frequently required to obtain multiple separate “sub-permits” and the interpretation of national 
and local rules is often inconsistent. The application phase can last anywhere from three to 24 
months, with great variation both between and within Member States. An appeal phase may 
extend  the  process  even  longer.  These  delays  significantly  increase  costs  and  uncertainty, 
especially for SMEs, making housing projects riskier and less attractive to investors.  Despite 
a broad consensus on the need for reform, there is no comprehensive overview of permitting 
across the EU, nor a solid and comparable baseline to monitor progress and guide policy.  

In terms of digitalisation and compared to other ecosystems, the European construction 
ecosystem is lagging behind in every part of the life cycle of buildings and construction 
works. This includes design, planning and permitting, construction, operation, renovation, and 
end  of  life  possibilities.  Digitalisation  progress  across  the  EU  remains  uneven,  as  Member 
States  take  different  governance  approaches  and  operate  at  varying  levels  of  technological 
maturity18. In addition, the lack of integration and interoperability between systems makes it 
difficult to collect and analyse reliable data on buildings and materials, which is essential for 
achieving sustainable construction and circular economy goals, and for scaling up activities. 
There  is  untapped  potential  in  creating  a  coherent  framework  bringing  together  digital 
permitting,  the  Digital  Product  Passport  (under  the  new  Construction  Products  Regulation), 
and Digital Building Logbooks. 

Modernising administrative procedures, and reducing restrictions, especially those related 
to  permitting  for  both  construction  and  renovations,  could  act  as  a powerful  catalyst  for 
productivity improvements brought about by broader digitalisation in the sector, especially for 
SMEs. It would not only make permitting faster and more efficient but also contribute to better 
data sharing and transparency throughout the construction value chain. 

2.1  Simplification of permitting procedures 

Simplifying  permitting requirements,  and  digitalising  permitting  processes  could  bring 
more certainty and therefore substantial economic benefits. A case study in Prague estimated 
that  a lengthy  residential  permitting  process  adds  approximately  16.5%  to  residential 
construction  costs19.  Digital  tools  such  as  Building  Information  Modelling  (BIM)20  have 
already demonstrated their potential to cut administrative burdens and shorten decision-making 
times in both public and private housing projects. In Member States that are already advanced 
in this area, the concrete benefits are already clear. BIM-based permitting systems implemented 

17  “Questionnaire  on  building  permit  process  and  digital  building  permits  –  summary  report”,  European 
Commission, 2025 + Call for Evidence 
18  While  some  countries  operate  a  decentralised  system,  where  municipal  authorities  issue  building  permits 
(e.g. Austria),  others  developed  centralised  national  platforms  (e.g.  Estonia).  In  addition,  only  some  Member 
States (e.g. Estonia, Finland) rely on online permitting systems and are increasingly integrating  BIM into their 
processes. 
19 Lukavec, M., Čáp, V., & Čermáková, K. (2024). How permitting process length influences development costs 
and real estate prices. Economics and Environment, 89(2), 768-768. 
20  BIM-based  permitting  is the  use  of  Building  Information  Modelling  (BIM)  in  the  building  permit 
process. Applicants  submit  a  3D  BIM  model,  which  allows  for  automated  checks  against  building  codes  and 
regulations, potentially linking the model to a digital twin of the surrounding buildings and infrastructure. This 
system allows to move the compliance verification process from a manual to a semi-automated one 

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in  Finland21  have  contributed  to  reducing  processing  times,  increasing  transparency  and 
improving data quality. 

First steps towards simplification of permitting are being taken through the Simplification of 
administrative  burdens  in  environmental  legislation22,  including  the  legislative  proposal on 
speeding up environmental assessments23. Member States are encouraged to make use of the 
provisions in this package to a maximum extent, in order to speed up planning, zoning and 
permitting processes of housing developments and related infrastructure. 

To address challenges affecting housing projects specifically, the Commission will carry out 
a study to provide a comprehensive assessment of building permitting procedures across 
the 27 Member States. This exercise, running from December 2025 until October 2026, will 
evaluate the degree of digitalisation within national permitting procedures and examine how 
legislative and technical requirements affect the supply of housing, whether for new buildings, 
renovations,  or  repurposing.  It  will  evaluate  existing  overlaps  of  applicable  regulations  and 
assess the main inefficiencies and bottlenecks in the procedures. It will also analyse how these 
requirements  impact  the  competitiveness  of  the  construction  sector  across  the  EU27  and 
identify  relevant  national  initiatives  aimed  at  simplifying,  accelerating  or  digitalising 
permitting processes. Attention will be given to the hurdles encountered by small and micro 
enterprises. 

The study will feed into the  future work of the Commission, including  the preparation of a 
housing simplification package in 2027 and Affordable Housing Act.  In addition, based on 
the  results  of  this  assessment,  the Commission  may  also  develop  guidance  and  best 
practices  to  help  Member  States,  respecting  subsidiarity,  introduce  streamlined,  fully 
digital permitting systems across the Single Market. The Commission will work together 
with  Member  States  for  the  further  simplification  and  monitor  progress  in  Member  States, 
including where appropriate through the future European Housing Alliance.  

Member  States  can  benefit  from  the  EU  support  in  their  efforts  to  streamline  and 
digitalise  permitting  procedures.  The  Technical  Support  Instrument  (TSI)24  can  provide 
technical  and financial  assistance  to  help  Member States  build the necessary  administrative 
capacity and carry out the required reforms. The 2024 “Digital Building Permits Toolkit for 
Public  Authorities”  provides  practical  support  and  promotes  the  adoption  of  BIM-based 
permitting and offers concrete tools for local administrations. 

21 according to an estimation from city of Järvenpää, the average time to conduct automated checks can be reduced 
to 1-5 minutes for an average apartment building compared to 1-2 days to conduct manual checks from 2D pdf 
drawings. The use of automated checks and IFC models with required data content reduces the average time to 
handle the full building permit application from an estimated 40 working days to 10 working days. 
22 COM(2025)980 Simplifying for sustainable competitiveness 
23  COM(2025)984  -  this  includes  amendments  of  legislation  and  a  proposal  to  speed  up  and  streamline 
environmental assessments, for example by avoiding multiple assessments in case of small changes or extensions, 
including for the planning and construction of new residential, affordable or social buildings as well as the related 
social infrastructure directly serving those residential buildings. 
24 The TSI is an EU programme that provides tailor-made technical expertise to EU Member States to design and 
implement reforms. The TSI was recently used to implement  BIM in public procurement, including setting up 
pilot projects in Greece and Spain. 

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Action 1 - Simplifying and digitalising permitting procedures 

- The Commission  will work with  Member States  to  simplify national, regional  and local 
permitting  procedures  through  a  thorough  mapping,  possibly  feeding  into  the  housing 
simplification package (2027) and the Affordable Housing Act (Q4 2026). 

- The Commission will continue to support Member State reforms and leverage funding 
instruments (Recovery and Resilience Plans, Cohesion policy funds and Digital Europe). 

2.2  Boosting digitalisation in the construction ecosystem 
.ne 

Simplification  in  the  construction  ecosystem  needs  to  happen  through  digitalisation, 
to increase predictability and speed for all actors involved. The European Commission is 
committed to further supporting the increased uptake of digital technologies in the construction 
ecosystem.  

While  many  digital  tools  already  exist  and  others  are  being  developed,  their 
interoperability is still suboptimal. Improving interoperability will unlock major efficiency 
gains.  It  will  facilitate  once-only  data  systems  and  the  exchange  of  information  along  the 
construction  project  life  cycle,  from  the  design  stage  to  the  permitting  procedures,  the 
installation  phase  on-site,  the  use  phase  and the  end-of  life.  This  interoperability  not  only 
enhances  permitting  efficiency,  but  it  also  enables  more  consistent  application  of  rules, 
supports energy-efficiency targets and circularity. The re-use of validated data across systems 
reduces the administrative burden for architects, engineers and developers. At the same time, 
authorities  will  be  able  to  monitor  more  efficiently  compliance  with  safety,  accessibility, 
energy efficiency, water resilience and sustainability requirements.  

The new Construction Products Regulation (CPR) is a cornerstone in the support towards 
more digital data flows in construction. CPR requires that all construction product information 
(including technical information, fire performance, safety information, environmental impacts 
and other  relevant  information)  is  provided  in  a  digital  interoperable  declaration  of 
performance and conformity.  
The Digital Product Passport (DPP), becoming mandatory under the new CPR, as of 202825, 
will allow  using  this  information  for  different  applications  such  as  building  design,  market 
surveillance  or  in  digital  building  logbooks  for  later  renovations.  By  replacing  paper 
documents,  national  databases  and  scattered  PDF  documentation  with  a  unified,  EU-wide 
digital  system,  the DPP  will  make  reliable  and  verified  product  data  accessible  to  all 
stakeholders  in  a machine-readable  form.  As  such,  it  will  simplify  procedures,  reduce 
administrative costs and enhance transparency26. The DPP will enable designers, contractors 
and  public  authorities  to  find  comparable  information  on  technical  and  environmental 
performance of products. The DPP will enhance circularity in the construction sector as it will 

25 The horizontal DPP system is expected to be established at the beginning of 2027. A CPR delegated act on DPP 
implementation  will  follow  and  the  DPP  will  be  mandatory  for  construction products  covered by  harmonised 
standards and European Assessment Documents 18 months later, by 2028. The first products will be cement and 
structural metallic products followed by windows and doors. 
26 As part of the digitalisation efforts under the revised CPR, the introduction of an online information system is 
foreseen, which will store the Declaration of Performance, Declaration of Conformity and instructions for use of 
all harmonised products. This system will facilitate access to the declarations reducing the time needed by the 
users of construction products to find information. This is expected to reduce the administrative burden by 310 
million EUR. 

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be easier to share information on re-usability and recyclability of materials in pre-demolition 
audits. Improved information sharing of the carbon footprint of building materials will support 
the development  of lead markets  for low-carbon construction products, including bio-based 
products. 

Complementing the DPP, and based on best practices and materials gathered, the Commission 
will  promote  a  harmonised  rollout  of  Digital  Building  Logbooks27  (DBLs)  across  the  EU. 
DBLs have the potential to become a single source for information about buildings from design 
and construction to renovation and demolition leading to improved decision making at every 
stage  of their  life  cycle.  To  make  an  interconnected  digital  ecosystem  come  to  fruition,  the 
Commission will work on a standardisation request for a DBL standard.  In addition, the 
Commission will promote a mechanism for data exchange and aggregation across DBLs 
to further facilitate Energy and water efficiency, circular construction and renovation. 

The  ultimate  objective  is  to  fully  connect  digital  tools  such  as  the  DPP  for  construction 
products,  DBLs,  digital  permitting  systems,  and  pre-demolition  audits  to  ensure  full 
interoperability and unlock all potential benefits of digitalisation in the construction ecosystem. 
In the future, the companies operating in the construction ecosystem would also benefit from 
the  functionalities  offered  by  the  Business  Wallet  to  further  facilitate  and  speed  up  their 
operations, for instance by using it – in synergy with the Digital Product Passport – for forms 
and authorisations to enable seamless interoperable procedures in the Single Market.  This has 
to be achieved in full compliance with rules on data protection and taking into account high 
standards of cybersecurity. 

To  accelerate  the  sector’s  digital  transition,  the  Commission  is  promoting  an  “AI-first” 
approach  under  the  Apply  AI  Strategy28.  This  approach  encourages  the  adoption  of  AI 
technologies across manufacturing, engineering and construction to improve design, planning 
construction and end-of-life processes. Key priority applications include AI-generated BIM-
models for existing buildings, automated compliance checking for building permits and AI-
assisted site planning and design optimisation. 

Moreover,  the  Commission  continues  to  work  closely  with  the  EU  BIM  Task  Group 
and the “BIM and Public Procurement” community within the Public Buyers Initiative29. These 
collaborations focus on increasing the use of BIM by public authorities, as they play a key role 
in setting digital standards through procurement and permitting practices. 

27 A digital building logbook is a centralised digital repository that stores all relevant information about a building, 
from  its  design  and  construction  through  its  entire  lifecycle,  including  operations,  maintenance  and  potential 
renovation. By creating a single source of truth for building data, DBLs aim to improve information management, 
enhance  transparency  and  facilitate  informed  decision-making  for  stakeholders  such  as  owners,  occupants, 
financial institutions and public authorities 
28 “Apply AI Strategy”, COM/2025/723 final 
29 https://public-buyers-community.ec.europa.eu/communities/bim-and-public-procurement  

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The Commission calls on Member States and stakeholders to make optimal use of the multiple 
funding instruments30 available supporting digital reforms in the construction sector, such as 
creating  digital  building-permit  systems,  modernising  public-sector  data  infrastructures, 
the deployment of data spaces and AI tools that can underpin automated compliance checking 
and digital twins for buildings – all contributing to a more efficient, data-driven and sustainable 
construction ecosystem. 

Action 2 – Moving towards full digitalisation of the Single Market for Construction 

- Mandatory application of the Digital Product Passport as of 2028, will make the data related 
to construction products easily accessible for all stakeholders and applications.   

- The further step in digitalisation will be the  roll out of a harmonised system for Digital 
Building  Logbooks,  with  a  standardisation  request  as  a  first  step  (in  Q1  2026  with  the 
objective to have a harmonised DBL standard by the end of 2028).  

3  Accelerating  innovation  and  modernising  the  construction 

market 

According  to  the  2024  European  Investment  Bank  (EIB)  Investment  Survey31,  only  24% 
of construction firms reported introducing new products, processes or services in 2023, well 
below the 32% EU average  for other sectors. The sector also  ranks  last among all  14 EU 
industrial  ecosystems  in  both  recent  and  long-term  expected  investments  in  digital 
transformation32.  The high  share  of  SMEs  in the  EU  construction  ecosystem  is  a  factor,  as 
SMEs  typically  face  more  constraints  in  terms  of financial  and  human  capital  to  drive  the 
digital transformation forward33. 

This  innovation  deficit  holds  back  productivity  and  limits  the  sector’s  ability  to  respond 
to growing  housing  needs  as  well  as  climate  and  energy  objectives.  Without  a  stronger 
innovation  ecosystem,  the  EU  risks  losing  ground  to  global  competitors  in  areas  such  as 
modular  construction,  low-carbon  materials  (including  bio-based,  reused  and  recycled 
material) and smart building technologies. 

Unlocking the supply side: the need to scale up industrial and digital innovation 

Boosting the uptake of advanced technologies across construction can dramatically improve 
speed,  cost  efficiency  and  sustainability.  Key  innovations  include  automated  and  robotic 
construction, 3D printing, offsite and modular building, low-carbon materials (including bio-
based materials)  and AI applications for design,  project management and facility operation, 
many of which emerge from digital scale-ups and SMEs. 

30 The Recovery and Resilience Facility, Digital Europe, the European Regional Development Fund and Horizon 
Europe 
31 Investment Survey 2024, European Union Overview (EIB 2024) 
32 Annual Single Market Report 2022, European Commission 
33 https://ec.europa.eu/eurostat/web/interactive-publications/digitalisation-2025  

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Among these, offsite and modular construction and renovation solutions offer the clearest 
potential  for  ramping  up  housing  supply  rapidly3435.  By  shifting  large  parts  of  the  building 
process into controlled factory environments36, errors are reduced, production is streamlined, 
and construction timelines are shortened. This makes offsite solutions  particularly attractive 
for  social  and  affordable  housing,  where  speed,  quality  and  cost-efficiency  are  critical37. 
Moreover,  modular  components  can  often  be  disassembled  and  reused,  contributing  to 
circularity and resource efficiency. Under the New European Bauhaus, the Commission will 
develop a blueprint catalogue that will support exchange of best practices and aim to facilitate 
permitting. 

Beyond  domestic  housing,  modular  and  prefabricated  systems  are  increasingly  in  demand 
for reconstruction efforts in crisis regions, such as Ukraine and Gaza as well as areas affected 
by extreme  weather  and  climate  events  or  other  natural  disasters.  EU  companies  already 
possess strong technological capabilities and could become global leaders in this expanding 
market, if barriers are reduced and standards harmonised38. 

However,  scaling  up  these  innovations  remains  difficult.  The  coexistence  of  27  national 
building codes and varying regional regulations fragments the market and limits scalability. 
The lack of harmonised standards undermines reliability, increases risk and raises financing 
costs  for producers  and  project  owners.  The  high  upfront  investment  needed  for  offsite 
facilities, combined with uncertain demand and limited insurance coverage, further constrains 
growth39.  To reach  its  full  potential,  estimated  at  an  annual  growth  of  4.5%  for  residential 
buildings40, barriers to offsite construction must be reduced. 

Driving the demand side: creating a market for sustainable and resilient construction 

To complement innovation on the supply side, the EU must also strengthen market demand 
for sustainable,  resilient  and  innovative  products.  The  transition  to  climate  neutrality  is 
increasing the need for low-carbon materials such as low-carbon cement, low-carbon concrete, 
low-emission steel, recycled content in products, bio-based, and reused products. 

The  Commission  will  reinforce  this  shift  by  introducing  sustainability  and  resilience 
requirements  for  public  procurement  of  EU-made  low-carbon  products  in  the  Industrial 
Accelerator Act. These measures will reward innovation while upholding EU environmental 
and  social  standards.  The  criteria,  definitions  and labels  for  construction  products  will  be 
defined by the CPR. 

In  parallel,  the  upcoming  revision  of  the  Public  Procurement  Directive,  by  facilitating 
sustainability in tendering, will help creating stable demand for low-carbon (including bio-
based) construction products and innovative methods such as novel modular building solutions, 
often produced by SMEs. The review process will also consider among other elements the issue 

34 Particularly in countries such as Ireland and the UK, which are facing severe housing shortages, offsite methods 
are developing into a viable option to build houses at a fast and affordable rate.  
35  European  Commission:  DG  for  Internal  Market,  Industry,  Entrepreneurship  and  SMEs, Market  potential  of 
offsite construction for housing supply – Report, Publications Office of the European Union, 2025  
36 Shifting to factory production will open construction to new job profiles and increase the attractivity of the 
sector, helping to tackle the labour shortage including greater the participation of women. 
37 Market potential of offsite construction for housing supply – Ecorys – Commissioned by DG GROW, 2025 
38 The on-going reconstruction of Ukraine offers useful lessons: the construction practice of new  homes often 
includes innovations in terms of treating and reusing demolition waste, re-use of building materials, and modular 
construction. In many cases these could be replicated for the reconstruction of other war-torn areas, such as Gaza. 
Many innovations could prove useful within the EU construction practice too and bring support in bridging the 
EU housing supply gap. 
39 Call for Evidence 
40 Monitoring industrial ecosystems – Construction Analytical Report 2024 (European Commission) 

9 

 
 
 
of  subcontracting,  including  the  responsibilities  and  qualifications  of  contractors  and 
transparency  in  supply  chains  which  can  help  to  combat  abuses  and  support  good  faith 
employers in the construction sector. Leveraging the EU’s vast public procurement market can 
de-risk  private  investments,  accelerate  production  capacity  and  drive  down  costs  through 
economies  of  scale41.  Finally,  initiatives  under  the  Bioeconomy  Strategy42  will  support 
construction as one of the lead markets for bio-based products.  

In  line  with  the  objectives  of  the  Bioeconomy  Strategy,  the  Carbon  Removal  and  Carbon 
Farming Certification Framework will develop a certification of long-lasting biogenic carbon 
storage  in buildings.  This  will  provide  more  visibility  to  the  environmental  benefits  of  bio-
based solutions in the sector, increasing their market demand. 

3.1  Modernising the regulatory framework to increase innovation uptake 
The  new  Construction  Products  Regulation  marks  a  major  step  towards  a  more  modern 
and innovation-friendly regulatory framework. The new legal framework can address all 
technical and regulatory needs including environmental issues and digitalisation.  

With the CPR Acquis process43 the Commission aims to update, by 2033, all harmonised 
standards developed over the last 25 years and extend coverage to all relevant product 
families.  The  process  provides  a  comprehensive  basis  to  guarantee  an  efficient  and  fast 
standardisation development. Standards for key materials such as cement are being developed 
as  a  priority  to  allow  for  timely  delivery.  It  will  accelerate  the harmonisation  of  product 
standards across the Single Market, thereby reducing administrative burdens and facilitating 
market access for more sustainable products, which is crucial especially for the SMEs in the 
construction ecosystem. 

The new standards will contribute to the construction of safe, accessible and environmentally 
friendly  buildings,  will  enhance  the  Single  Market  and  reduce  costs  by  economy  of  scale. 
Crucially,  the  CPR  will support  the  shift  from  prescriptive  national  building  codes  towards 
performance-based standards, therefore allowing greater flexibility for innovative construction 
methods.  To  enable  the  cross-border  deployment  of  offsite  and  modular  systems,  the 
Commission  will  give  priority  to  the  development  of  specific  standards  for  prefabricated 
products, building kits and modular units, creating a single market for these products. SMEs 
are duly represented in the standardisation development and the Commission will ensure that 
the harmonised standards and applicable delegated acts will not overburden SMEs. 

To translate regulation into practice, the Commission will issue guidance on modular and 
offsite construction. This will include best practices and successful demonstrations of proof 
of concept  in  terms  of  increasing  safety,  accessibility,  sustainability,  rapid  deconstruction 
and affordability with modular concepts and will support broader uptake for both new builds 

41 For example, the Advanced Materials Act, planned for Q4 2026, will support research and innovation, expand 
production  capacities  within  the  EU  and  streamline  regulatory  processes  for  advanced  materials.  It  will 
specifically  focus  on  materials  that  are  essential  for  the  green  and  digital  transition  across  sectors,  including 
construction. The Bioeconomy Strategy sets out measures to reduce technical barriers and thereby increase the 
commercial adoption of innovative bio-based construction solutions. 
41 A Green Deal Industrial Plan for the Net-Zero Age, COM(2023) 62 
42 A Strategic Framework for a Competitive and Sustainable EU Bioeconomy - SWD(2025) 895 
43  The  CPR  acquis  process  is  a  collaborative  effort  of  the  Commission,  Member  States,  stakeholders  and 
standardisation organisations to support the development of standardisation requests and legal acts necessary for 
the efficient implementation of the CPR. 

10 

 
 
 
and renovations44. This guidance will build on the successful projects developed under LIFE 
Clean Energy Transition on modular and off-site construction45. These efforts will also come 
within  the scope  of  the  NEB’s  international  pillar,  which  includes  projects  dedicated  to  the 
reconstruction of Ukraine and the dissemination of best practices for sustainable, resilient post-
war recovery. 

Furthermore,  the  Commission  will  ensure  that  the  second-generation  Eurocodes46  support 
innovation,  for  instance  by  including  instruments  for  the  assessment  and  re-use  of  existing 
structures, and for the use of innovative materials such as fibre-polymer composite structures 
and tensioned membrane structures. 

Together,  these  actions  will  create  a  virtuous  cycle  between  innovation  and  demand: 
a harmonised  Single  Market  for  sustainable  construction  products  will  give  innovators 
the confidence  to  invest,  while  green  procurement  and  industrial  policies  will  generate  the 
market  pull  needed  to  scale  up  production.  By  modernising  both  the  regulatory  and 
technological foundations of construction, Europe can deliver more affordable, sustainable and 
high-quality housing, much faster than before. 

Action 3 - Boosting innovation uptake by development of standards  

- The Commission will accelerate the development of standards for construction products 
under  the  new  CPR.  The  first  new  product  standards  will  cover  cement,  structural  metallic 
products, glass, doors and windows. The Commission  has adopted a first Working Plan for 
2026 to 2029 for the implementation of the CPR including priorities and timeframes.   

- The Commission is launching, as a priority under the CPR Acquis process, the request for 
development of standards for offsite construction products and modular systems (launch 
early 2026, with the aim to adopt the first standardisation request in 2027).  

3.2   Increasing  the  deployment  of  innovative  construction  materials  and 

products 

In order to meet the growing demand for faster, greener and more affordable building, Europe’s 
construction sector urgently needs to accelerate investment in innovative materials, products 
and technologies.  This  will  support resource-efficient, cost-effective, and innovative growth 
while ensuring a sustainable use of limited natural resources. 

Progress  remains  slow,  constrained  by  high  development  costs,  fragmented  regulations  and 
cautious financing. As a result, the gap between current market needs and what the industry 
can  deliver  today  is  widening.  This  affects  SMEs  in  the  first  place,  due  to  their  reduced 
investment capacity compared to major companies. 

To bridge this gap, the European Investment Bank has announced a EUR 400 million “Lending 
Envelope”  dedicated  to  companies,  including  SMEs,  across  the  housing  value  chain,  from 
material producers to construction firms and equipment manufacturers. This initiative will be 
deployed  with  backing  of  InvestEU  and  will  finance  new  technologies  that  have  potential 
to tackle the high construction and development costs and speed up the supply of new housing 
stocks. It will support innovations in digitalisation, automation and AI applications to enhance 

44  For  more  on-going  projects,  see:  https://joint-research-centre.ec.europa.eu/projects-and-activities/iresist-
home/ongoing-projects_en 
45 For example: LIFE Giga Regio Factory - https://www.energiesprong.org/projects/giga-regio-factory 
46 The Eurocodes are a series of 10  voluntary  European standards, EN 1990 - EN 1999, providing a common 
approach for the design of buildings and other civil engineering works and construction products.  

11 

 
 
 
quality  during  planning  and  construction.  The  scope  will  include  innovative  construction 
techniques, innovative solutions for energy efficiency and renewable energy, innovations in 
materials  (glass,  cement,  concrete,  construction  steel,  ceramics,  wood  products,  etc.),  and 
research,  development  and  innovation  investments  of  equipment  manufacturers,  including 
robotics and smart construction machinery.  

Beyond  the  EIB  lending  envelope,  the  new  Pan  European  Investment  Platform  for 
affordable and sustainable housing, comprising the EIB Group, National Promotional Banks, 
the CEB, the EBRD, and other financial institutions, will include a value chain approach from 
innovation in construction to the broader scope of real-estate development, maximising public 
investment to leverage additional private investment. The platform will increase visibility of 
investment  opportunities  in  social,  affordable,  and  sustainable  housing  to  better  attract 
investors and project promoters. 

Unlocking private investment also requires removing the regulatory barriers that currently 
prevent new technologies from scaling up across borders. To address this, the Commission will 
launch,  under  the  Competitiveness  Coordination  Tool  (CCT),  a  pilot  project  focused  on 
offsite and modular construction. This pilot will aim at promoting cross-border multi-country 
projects and tackling regulatory fragmentation that impedes offsite and modular gain sufficient 
scale.  

This  pilot  will  help  participating  Member  States  align  their  regulatory  frameworks,  thereby 
facilitating  the  free  flow  of  offsite  construction  products  and  components  across  the  Single 
Market. At the same time, the CCT will provide targeted financial support to strengthen supply 
chains  and  boost  industrial  capacity.  On  the  demand  side,  it  will  introduce  complementary 
measures to make innovative construction solutions more attractive and competitive in public 
and private markets, also contributing to deliver affordable houses across the EU at pace and 
competitive cost. 

Existing EU programmes will continue to play a key role in accelerating innovation in the 
construction  sector.  The  NEB47  will  continue  to  support  through  policy,  knowledge  and 
funding the delivery of high-quality affordable and sustainable housing, enabling innovation 
and providing targeted support to the construction ecosystem to deploy integrated and inclusive 
solutions.    In  parallel,  Horizon  Europe  (through  the  NEB  Facility  and  Built4People 
Partnership) will continue to fund research, development and demonstration projects focused 
on advanced materials, circular construction and digital transformation. These instruments will 
help  bring  innovations  from  the  laboratory  to  large-scale  deployment,  reinforcing  Europe’s 
leadership in sustainable construction.  

47 https://new-european-bauhaus.europa.eu/index_en   

12 

 
 
 
Finally,  Cohesion  policy  can  also  play  role  in  accelerating  the  deployment  of  innovative 
construction  materials  and  products  by  supporting  targeted  investments  into  regional 
innovation  ecosystems  and facilitating the uptake of  cutting-edge solutions. Together, these 
measures will boost both supply and demand for innovative construction solutions, enabling 
Europe  to  build  faster,  smarter  and  more  sustainably  while  creating  new  opportunities  for 
businesses and workers across the construction value chain. 

Action  4  -  Leveraging  financial  instruments  to  increase  deployment  of  innovative 
construction materials, products and technologies 

- The EIB has recently set up a new lending envelope of EUR 400 million, with involvement 
of InvestEU, dedicated to investing in new technologies that have the potential to tackle the high 
construction and development costs and speed up the supply of new housing stocks.  

-  The  Commission  will  launch  a  pilot  project  on  offsite  construction  under  the 
Competitiveness Coordination Tool with the aim to remove regulatory obstacles and create a 
real  pan-European  market  for  the  sector,  to  help  it  reach  the  scale  needed  to  provide  a  faster 
response to the pressing construction targets. In the course of 2026, the Commission will lead the 
efforts to develop this CCT project with Member States.  

- The Commission will continue funding research and roll-out of quality innovative solutions 
and disseminate good practices under the New European Bauhaus 

4  Ensuring stable access to construction materials 

Rising material costs and barriers to secondary material use 

Europe’s construction sector faces mounting pressure from  volatile raw material supplies, 
rising  costs  and  fragmented  access  to  secondary  materials.  Prices  for  key  construction 
products have surged dramatically between 2020 and 2024, e.g., by 28% for concrete and 45% 
for ceramics, such as bricks and roof tiles48. Since material costs account for 30-40% of total 
residential construction costs, these trends are directly pushing up housing prices and making 
construction planning unpredictable. Supply chain disruptions, scarcity of critical inputs and a 
lack  of  comprehensive  information  on  material  availability  further  amplify  the  problem, 
making it difficult for developers to anticipate shortages or price spikes. 49 

The challenge extends to secondary materials: several pieces of legislation such as the new 
CPR,  the  Energy  Performance  of  Buildings  Directive50  (EPBD)  and  other  climate-focused 
legislation51  encourage  the  production  and  use  of  recycled  or  low-carbon  products.  In 
particular, the life-cycle Global Warming Potential of new buildings will be calculated based 
on an EU framework52, building on CPR data, which will strengthen demand for sustainable 
construction products. Despite increasing economic incentives, uptake remains limited: only 
0.7% of construction and demolition waste is prepared for reuse and recycling rates remain low 

48 Source: Eurostat 
49 Call for evidence 
50  Directive  (EU)  2024/1275  of  the  European  Parliament  and  of  the  Council  of  24  April  2024  on  the  energy 
performance of buildings (recast) OJ L, 2024/1275, 8.5.2024, ELI: http://data.europa.eu/eli/dir/2024/1275/oj  
51 such as the European emission trading system for big emitters (ETS1), the Energy Efficiency Directive (EED), 
and the EU Taxonomy and national legislation linked to carbon reduction roadmaps. 
52  Commission  delegated  regulation  amending  Annex  III  to  Directive  2024/1275/EU  and  setting  out  a  Union 
framework for the national calculation of life-cycle global warming potential. 

13 

 
 
 
  
for  key  materials,  e.g.,  10%  for  plaster  and  6%  for  glass53.  Two  of  the main  barriers  are 
insufficient  information  on  materials  released  at  demolition  sites  in  European  markets, 
preventing the development of robust secondary markets; and fragmented or missing End-of-
Waste (EoW) criteria54, creating administrative hurdles that block cross-border circulation of 
secondary materials. 

Measures to strengthen primary and secondary material availability 

Ensuring  stable  access  to  primary  construction  materials  is  critical  to  meet  growing 
housing  demand  and  EU  climate  ambitions.  The  Commission  is  responding  with  a  multi-
layered  approach.  Existing  initiatives,  including  the  Critical  Raw  Materials  Act55,  the 
Affordable  Energy  Action  Plan56,  the  European  Steel  and  Metals  Action  Plan57  and  the 
ReSourceEU  Action  Plan58,  aim  to  reduce  input  costs  and  improve  predictability  for 
construction materials.  

Over the last 15 years, the mapping and tracking of critical raw materials for EU’s strategic 
sectors  has  allowed  to  anticipate  shortages  and  take  measures  to  mitigate  risks  of  supply 
disruptions59. Several of these materials, including feldspar, boron, aggregates, gypsum, silica 
sand,  limestone  and  perlite  are  particularly  relevant  for  construction.  Via  the  European 
Construction Observatory60, the Commission will track these and other relevant materials and 
products - such as steel - with more granularity, and report on their availability and price61.  

Regarding secondary materials, the Commission is working  to create a functioning Single 
Market for reused and recycled products. Harmonised end-of-waste criteria will transform 
materials from waste into valuable products, facilitating cross-border trade and enabling their 
use in both new construction and renovations. The Joint Research Centre is developing EoW 
criteria  for  aggregates  from  construction  and  demolition  waste.  Furthermore,  the  Circular 
Economy  Act  will  address  fragmentation  of  end-of-waste  criteria,  facilitating  the  uptake  of 
secondary materials also in construction products. 

Member States have an obligation under the Waste Framework Directive62 (WFD) to promote 
re-use  of  construction  and  demolition  waste.  To  this  end,  many  Member  States  already 

53 JRC Publications Repository - Techno-economic and environmental assessment of construction and demolition 
waste management in the European Union 
54 In order for materials from construction demolition sites with the legal status of ‘waste’ to become available 
again for further use, so called End-of-Waste (EoW) criteria have to be fulfilled. The Waste Framework Directive 
establishes certain elements to be included in such criteria (quality criteria, input materials, treatment processes...) 
that Member States can establish. When EoW criteria do not exist or if they differentiate across Member States 
or regions, it hinders re-use and circulation of secondary materials. 
55 The Critical Raw Materials Act (2024) aims to ensure the access to a secure and sustainable supply of critical 
raw materials for EU’s strategic sectors, such as clean energy and digital technologies. 
56 As energy prices are a main factor driving up material prices, the Affordable Energy Action Plan56 (2025) 
aims to make energy costs more predictable and affordable, reducing material costs and boosting competitiveness. 
57 The European Steel and Metals Action Plan57 (2025) focuses on creating a lead market for low-carbon steel, 
increasing circularity, levelling the international playing field and leveraging investments in these sectors 
58 COM(2025) 945 RESourceEU Action Plan Accelerating our critical raw materials strategy to adapt to a new 
reality 
59 Regulation (EU_ 2024/1252 of the European Parliament and of the Council of 11 April 2024 establishing a 
framework for ensuring a secure and sustainable supply of critical raw materials 
60 https://single-market-economy.ec.europa.eu/sectors/construction/european-construction-observatory-eco_en 
61 Special focus will be on imports, production, exports and prices for each of the materials selected. It will identify 
the product families using those raw materials and identify the industries most exposed to fluctuations in these 
materials 
62 Directive (EU) 2018/851 of the European Parliament and of the Council of 30 May 2018 amending Directive 
2008/98/EC on waste 

14 

 
 
 
implemented  mandatory  pre-demolition  and  pre-renovation  audits,  gathering  data  on 
available materials. Pre-demolition audits enhance transparency and facilitate the emergence 
of marketplaces for secondary materials, connecting the material supply from the demolition 
sites with demand from the manufacturers. However, the full potential of this information is 
only unlocked when delivered digitally and made public, allowing industry to collect, acquire 
and predict availability of the secondary materials.  

Subject to the results of an on-going impact assessment, through the Circular Economy Act, 
the Commission  will  develop  a  Digital  European  Construction  Resource  Assessment 
(DECRA) platform, connecting national databases providing information on pre-demolition 
audits. This will provide relevant data in a searchable and machine-readable format. Increased 
transparency  will  allow  manufacturers  to  quickly  identify  secondary  material  sources, 
reducing reliance on virgin resources and lowering production costs. For Member States that 
do not yet have a system in place for providing pre-demolition audits, this will represent an 
investment that will be largely offset by the benefits of increased use of secondary materials in 
construction. The Commission will also, by the third quarter of 2026, look into the merits of 
making such audits mandatory, by introducing a minimum set of mandatory and voluntary data 
points to be digitally available, while keeping the administrative burden to a minimum. 

Finally, the new CPR will close remaining gaps by integrating recycled content and circularity 
considerations  (repairability,  reusability,  recyclability  and  lifespan  extension)  into  product 
standards, therefore ensuring reused and recycled products can compete on equal footing with 
new materials across the EU. Together, these measures will stabilise material supply, unlock 
the potential  of  secondary  resources,  reduce  costs  and  support  a  more  sustainable,  resilient, 
and circular construction sector. 

Fully  integrating  circularity  considerations  will  unlock  savings  for  companies,  limit 
dependency  on  third  countries  for  the  raw  materials  the  sector  needs  and  contribute  to  its 
decarbonisation, by reducing the extraction and processing of primary ones. 

Action 5 – Enabling access to and circulation of the secondary construction materials and 
products  

- The Commission will set the legal steps and timeline to address fragmentation end-of-waste 
criteria and remove other obstacles to the free movement of secondary construction materials 
within the Single Market (by the third quarter of 2026, as part of the Circular Economy Act).  

- Subject to an on-going impact assessment demonstrating sufficient benefits, the Commission 
may propose mandatory digitalised pre-demolition audits (by the third quarter of 2026, as 
part of the Circular Economy Act) and subsequently set up a Digital European Construction 
Resource Assessment platform, which will help to connect the national systems.  

5  Ensuring access to services and improving skills  
EU  Single  Market  integration  in  construction  and  installation  services  remains  low. 
Construction remains predominantly a domestic activity, with 90% of firms, typically SMEs, 
providing  construction  services  only  locally.  While  the  construction  ecosystem  represents 
approximately  12%  of  the  EU’s  gross  value  added,  there  are  only  limited  cross-border 
operations in construction services: it is estimated that trade integration for construction sector 
services amounts to 1% only. Reasons for low-level integration of construction services include 
restrictive  national  regulation  on  business  authorisations,  the  high  number  of  regulated 
professions  in  the  sector  and  complex  mutual  recognition  of  professional  qualifications, 

15 

 
 
certificates and proof of competence. These barriers limit business opportunities and choice for 
customers and hamper the cross-border flow of construction services to the place where they 
are most in demand. A reduction of barriers in construction services will significantly increase 
EU gross value added63. 

Regarding the workforce, labour and skill shortages have been a longstanding structural 
problem  for  construction,  hampering  the  output  of  the  sector.  The  share  of  companies 
indicating a shortage of labour as a factor limiting their total output has been consistently high 
over  recent  years,  between  25%  and  30%  since  the  beginning  of  202364.  Moreover, 
the construction ecosystem suffers from an overall poor public perception connected to low 
job  security  and  stability,  tough  working  conditions  and  health  and  safety  risks,  and 
construction is still seen as a stereotypical “man’s job”65. This results in uncertainty and high 
labour  costs  for  construction  companies,  which  is  reflected  in  rising  costs  for  residential 
construction. 

Both the increased demand for housing and the green and digital transition are substantially 
increasing demand for specialised and highly skilled service jobs66. At the same time, this 
transition in terms of required skills, with an increased need for skills related to the use of AI, 
robots and modular design, has potential to attract young people and to improve the gender 
balance.  Continued  efforts  to  support  apprenticeships  are  essential  in  this  regard,  including 
targeted outreach to women.  Upskilling and reskilling construction workers with the specific 
skills that are most in demand, and completing the Single Market for construction services, will 
contribute to support labour supply and ensure capacity for housing construction. 

Moreover, complementing efforts to harnessing talents from within the Union, targeted legal 
mobility from third countries also has an important role to play. The recently adopted EU Talent 
Pool  aims  to  facilitate  the  recruitment  of  jobseekers  from  non-EU  countries  in  EU-wide 
shortage occupations at all skills levels, with construction one of the sectors with the highest 
shortages67. Other ways to enhance legal pathways to the EU are the Talent Partnerships68, 
the revised EU Single Permit Directive and the first EU Visa Policy Strategy69. As part of 
the Fair Labour Mobility Package (3Q2026), the Commission will further propose common 
rules for simpler procedures for handling the recognition of qualifications and validation of 
skills of third country nationals with the aim to enhance coherence and transparency and thus 
enhancing clarity for workers as well as for employers and authorities. 

5.1  Removing Single Market barriers for construction services 

The  Commission  is  committed  to  reducing  the  barriers  for  cross-border  provision 
of construction services. The objective is to maximise the potential of the Single Market for 
construction and installation services and contribute to increasing the productivity of the sector.  

63 IFO Institute: Building a Stronger Single Market: Potential for Deeper Integration of the Services Sector within 
the EU; Econpol Policy Report 52/2024 
64 Eurostat 
65 The share of women working in the construction sector (NACE F) is 10,6% in 2024 (Eurostat) 
66 The greening of the EU construction sector | CEDEFOP  
67 Once established, this will be the first EU-wide online platform open to any third-country national wishing to 
work legally in the Union, where participating Member States will register job vacancies of employers established 
in their territories. 
68  So  far,  talent  partnerships  have  been  established  with  Morocco,  Tunisia,  Egypt,  Pakistan,  and  Bangladesh. 
These  partnerships  provide  a  policy  and  funding  framework  to  strengthen  cooperation  between  the  European 
Union, Member States and key partner countries on mobility and skill development. 
69  Planned  for  January  2026,  this  will  include  measures  to support  the  arrival  of  trained  workers  from  third 
countries. 

16 

 
 
 
This is particularly true for border regions, where SMEs in the construction sector are hampered 
from  exploiting their proximity market  across the border.  Furthermore, the  Union of Skills 
Communication70 announced the Skills Portability Initiative to open up more opportunities for 
workers  and  businesses  to  fully  capture  the  potential  of  the  Single  Market.  One  of  its  key 
actions – to be presented as part of the Fair Labour Mobility Package - will be to expand 
automatic recognition for additional regulated professions via common training frameworks, 
and to modernise and streamline recognition processes for regulated professions, in particular 
by leveraging digital tools, including to facilitate and shorten procedures. 

A  second  action  will  be  examining  options  to  enhance  transparency  and  comparability  of 
qualifications  for  unregulated  professions  and  to  advance  a  coordinated,  interoperable  EU 
framework for secure, cross-border recognition. 

The  Construction  Services  Act  aims  to  foster  the  free  movement  of  construction  and 
installation services in the Single Market, through ensuring that companies, entrepreneurs and 
professionals which are authorised in their home Member State can provide services in other 
Member States more easily, while respecting social rights. The initiative aims at fostering a 
predictable  and  stable  business  environment  for companies  and  entrepreneurs  and  will  also 
support the cross-border operation of SMEs. 

Action 6 – Increasing the flow of cross-border construction services 

-  The  Commission  will  ensure  that  companies  and  professionals  can  provide  construction 
services  more  easily  across  borders,  without  lowering  social  standards,  through  a 
Construction Services Act (Q4 2026). 

-  The  Skills  Portability  Initiative  aims  to  enable  both  workers  and  employers  to  navigate 
recognition systems more efficiently, and to modernise recognition processes (Q3 2026) 

5.2  Addressing skills shortages in the construction ecosystem 

The  Commission  is  committed  to  supporting  the  construction  ecosystem  in  developing  the 
appropriate  skills  to  meet  the  growing  demand  for  labour  and  skills  in  housing  and  other 
construction  works.  For  instance,  the  Large  Scale  Skills  Partnership  (LSP)  for 
construction71 has set up a shared engagement model: major players in industrial ecosystems, 
including  associations  and  relevant  public  authorities,  commit  to  cooperate  and  invest  in 
upskilling  and  reskilling.  In  particular,  synergies  are  being  established  to  allow  a  high 
participation of SME employees to such trainings. Through its activities, the LSP will promote 
upskilling and reskilling of 30% of the workforce each year by 2030 across the industry, with 
a target of 3 million people trained annually within the EU construction workforce by 2030. 

The Blueprint Alliance “Modernising professional training in the construction sector”72 will 
develop training actions to address urgent skills needs in 2026 and long-term skills needs in 
2028, including initiatives to improve the image of the ecosystem and to attract better young 
talent  and  women,  including  by  strengthening  apprenticeship  provision.  Together  with  this 
Communication, the Commission published an analytical report mapping the current and 

70 https://commission.europa.eu/topics/eu-competitiveness/union-skills_en 
71 As part of the Pact for Skills partnership - https://pact-for-skills.ec.europa.eu/about/industrial-ecosystems-and-
partnerships_en 
72 Blueprint for sectoral cooperation on skills - Employment, Social Affairs and Inclusion 

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future  skills  and  workforce  needs  in  the  construction  sector73,  with  an  outlook  towards 
2030. This report will improve the fragmented skills intelligence and will provide evidence for 
future skills-related policies in the construction ecosystem.  

These actions will be supported by other Commission activities for pilot skills development, 
deployment  and  good  practice  sharing  in  deep  renovation,  BIM  modelling  and  circular 
construction. These are implemented via various Commission initiatives such as BUILD UP 
Skills,  the  Centres  of  Vocational  Excellence  in  the  construction  sector  and  the  European 
Alliance for Apprenticeships.  The Commission encourages Member States to make optimal 
use of the European Social Fund+ and national public funding to deploy future-ready training 
for reskilling and upskilling.  

The NEB Academy will accelerate up-skilling and re-skilling in the construction ecosystem to 
support the transition  towards a more  regenerative and circular system  of material  use. The 
expansion  and  consolidation  of  the  NEB  Academy  will  further  support  the  development  of 
knowledge, skills, and innovation, including support for start-ups and sandboxes for innovative 
products. 

Action 7 - Increasing the availability of skilled workforce in construction 

- The future European Competitiveness Fund will be able to support upskilling and reskilling 
actions  in  the  areas  covered  by  the  Fund,  such  as  construction,  and  foster  public-private 
partnerships  between  universities,  Vocational  Education  and  Training  (VET)  providers, 
businesses (in particular SMEs), social partners and applied research institutes. 

- The NEB Academy will be scaled up to support innovation and research, build capacity and 
skills for innovative construction methods and materials across the EU, and support SMEs 
and professionals.   

6  Working together on implementation 
Reinvigorating  the  construction  ecosystem  to  drive  Europe’s  competitiveness  requires 
transforming it from a fragmented and resource-intensive sector into a modern, competitive, 
digital  and  sustainable  industrial  ecosystem.  More  productive  construction  ecosystem 
translates into increased intensity of construction, including more affordable housing supply.  

The  Commission  will  continuously  monitor  the  situation  in  the  sector,  its  resilience, 
productivity and ongoing decarbonisation, in close cooperation with all the relevant actors. The 
High-Level  Construction  Forum  (HLCF)74  will  provide  the  main  platform  for  further 
communication about the actions set out in the Strategy as well as for monitoring the economic 
performance of the sector and its contribution to the lessening of the housing supply gap. The 
HLCF  will  ensure  synergies  with  the  European  Housing  Alliance  (EHA)  announced  in  the 
European  Affordable  Housing  Plan.  The  Alliance  will  provide  a  platform  for  monitoring 
implementation of national measures related to permitting and administrative procedures. 

This is a collective endeavour. Member States, regional and local authorities, industry, social 
partners  and  financial  institutions  all  have  a  role  to  play.  By  working  together,  Europe  can 

73 An analytical report on skills in the European construction sector - European Construction Observatory 
74 https://single-market-economy.ec.europa.eu/sectors/construction/construction-transition-pathway_en  

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transform its construction ecosystem into a true engine of competitiveness, one that builds not 
only homes, but also resilience, opportunities and confidence in Europe’s future. 

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