The volume index of newbuilding describes changes in the value at constant prices of newbuilding in domestic building construction from the comparison period or the base year of the index. Newbuilding refers to construction subject to a building permit as a result of which a new building or new space to an existing building is created. Newbuilding is divided into housing production and, in terms of industrial construction, into warehouse and manufacturing construction as well as commercial and office construction.
Fluctuations in the economy as well as economic conditions for industry are widely reflected in trends in the level of construction. Sector-specific development and the changing structures of business and industry have a direct impact on business’ and the public sector’s willingness to build and on the planning of new building projects. A consequence of economic instability and a fall in output, moreover, is a decline in the number of industrial and other investments such as newbuilding projects. In addition to investment, growth (or decline) in construction is influenced by trends in interest rates and inflation. The economic effects of construction are not restricted only to the development of the construction industry and its jobs; construction volume is widely reflected in the state of the economy and in forecasts of business demand and growth.
The public sector has a key role in the development of the building industry and construction volume. In addition, the public sector is a significant provider of financing for newbuilding, and it also steers and regulates conditions for construction through legislation, taxation and planning. The public sector’s central role in the planning and preparation of construction projects is justified by the fact that newbuilding volume and the targeting of construction have diverse spill-over effects on the employment rate and on urban structure development.