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Building Materials Prices in Poland Continue to Decline, Demand for Construction Materials Plummets

REAL ESTATEBuilding Materials Prices in Poland Continue to Decline, Demand for Construction Materials Plummets

The first publication of the average dynamics of building materials prices for this year by the PSB Trade Group, covering statistics for the whole of 2023, has announced a decline below zero for the fourth time in a row. As experts from the RynekPierwotny.pl portal noted, in last December, the average decrease was -2.6 percent year-on-year, while the reduction in rates restrained to -0.2 percent month-on-month. In this way, on the national market for building materials, not only is the correction of several months’ price hike being reinforced, but it also gains momentum.

The December continuation of the price correction of building materials at -2.6 percent should now be classified as significant. Since September, the price decrease has already totaled 5 percent, and interestingly, nothing so far indicates that the situation could radically change in the foreseeable future.

The measurement of building materials’ price dynamics by PSB Trade Group S.A. surprisingly intensified in December, especially considering the persistently high and difficult to overcome local inflation. Cement-lime remains the leader of increases as the product line with the most significant year-on-year increase of almost 17 percent, ahead of paints and varnishes (+7.1 percent), and building chemistry (+3.1 percent).

This time, the ratio of 7 to 13 of commodity groups increasing and decreasing in year-on-year terms remained unchanged. Among the latter, as a month ago, OSB boards with wood and thermal insulation stand out, this time with a price regression year-on-year of -24.7 percent and -8.5 percent, respectively.

Considering the ongoing discount on building materials, the demand parameters for specific product groups last year were quite interesting. According to PSB Group experts, “the dynamics of sales in December 2023 year-on-year was diverse, with a significant decline in product categories related to house construction (cement, lime -44%, home surroundings -42%, roofs, gutters -28%) and an increase in product groups related to interior renovation (finishes +31%, decorations +7% or tools +6%).”

Positive sales dynamics were part of eight product groups, and negative occurred in twelve cases, exactly the opposite of the previous month. This time it may suggest that the declining prices for building materials are due, at least in part, to insufficient demand for them.

As experts from RynekPierwotny.pl portal point out, the December collapse in demand for cement – lime, i.e., the basic product group used in construction, looks particularly interesting yet also quite troubling. A significant demand regression was also noted for: home surroundings, roofs – gutters, OSB boards – wood, dry construction, or thermal insulations, i.e., the next most important materials used when building houses. It’s interesting to see if the PSB Group data will translate into GUS residential construction statistics, which have been clearly coming out of the pit in recent months.

Author: Jarosław Jędrzyński, expert of the RynekPierwotny.pl portal.

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