The latest report from Statistics Poland (GUS), presenting preliminary data on residential construction for July and the first seven months of the year, shows a clear rebound across all indicators of investment activity. The medium-term downward trend in the main housing construction statistics has therefore visibly weakened, with signs of a possible cyclical turnaround in the immediate future.
The persistent downward trend in GUS housing statistics reversed sharply in July, significantly reducing the looming risk of a collapse in investment activity in Poland’s primary housing market. Interestingly, the improvement in the data was driven by both individual investors and developers, though the latter contributed much more strongly. The sharpest rebound came in new building permits issued to developers, but equally encouraging were the figures most crucial for the current business cycle – namely, the number of dwellings whose construction was started. It appears that developers’ earlier concerns about market demand gave way to renewed investment activity ahead of an expected surge in buyer interest this autumn.
In July, investors started construction on nearly 20,000 housing units, a result almost one-quarter higher than in June and only slightly below the level recorded a year earlier. Developers played the leading role here, with nearly 12,000 units started – a 35% increase month-on-month and on par with July of last year.
Meanwhile, in the first seven months of 2024, construction began on more than 130,000 housing units across Poland, still representing an 8% decline compared with the same period in the previous year. Developers accounted for about 80,000 of these units, down 13% year-on-year. These results continue to indicate a weaker investment climate in the housing sector, but July’s data raises hopes of breaking the stalemate in the near term.
Even more optimistic were GUS figures for new building permits or notifications with building designs in July. Across all categories of construction, more than 26,000 permits were issued – nearly 40% more than in June, and only 2% lower year-on-year. Since the beginning of the year, however, investors have obtained 147,600 permits, 14% fewer than in the same period last year.
Individual investors received around 50,000 permits in the first seven months of 2024, up 7% year-on-year. Developers, by contrast, obtained just under 93,000 permits during the same period – nearly one-quarter fewer than last year. Nevertheless, the sharp rebound in July suggests a significant reduction of this deficit in the coming months.
The July improvement was also evident in the number of completed housing units. Last month, 18,000 units were delivered for use, 17% more than in June and 4% fewer year-on-year. Since the beginning of the year, 110,000 units have been completed, 4% less than in the corresponding period of 2023.
Overall, the latest GUS data on housing construction in Poland presents a distinctly more optimistic outlook. Of particular note are the figures for housing starts, which rebounded in July after months of decline, halting their slide toward long-term lows.
Even better were the results for developer building permits, which after months at multi-year lows, rebounded decisively in July. This can be seen as a reliable signal of a sudden rise in developer optimism. The July halt in the decline of housing starts, building permits, and completed dwellings indicates a significant shift in sentiment among housing market players, who had until recently been operating in a highly uncertain economic environment.
This shift is likely the result of the first signs of a revival in housing demand following two interest rate cuts – with a third potentially on the horizon as early as next month. After a dip in developer sales volumes in June, July saw a clear rebound across most of Poland’s largest cities. According to BIG DATA RynekPierwotny.pl, developers in Warsaw, Kraków, Wrocław, the Tri-City, Łódź, Poznań, and the Upper Silesian-Zagłębie Metropolis sold just over 4,100 units in July, 8% more than in June. This was undoubtedly a result of improved mortgage availability in recent weeks.
What’s more, July was the first month this year in which none of the largest cities saw an increase in the average price per square meter of new dwellings. In Warsaw, the Tri-City, and Łódź, prices even dipped slightly. With a record-high supply of new housing on the market, this creates excellent conditions for buyers, especially in terms of negotiating prices. Such conditions, however, are unlikely to last indefinitely – particularly with expectations of increased demand in the autumn. For this reason, upcoming GUS data on housing construction may well continue July’s optimistic trend.
Author: Jarosław Jędrzyński, expert at RynekPierwotny.pl
Source: CEO.com.pl
