Statistics from GUS (Main statistical office in Poland) on housing construction in the first weeks of each year usually signal a seasonal weakening of investment activity. However, as experts from the RynekPierwotny.pl portal observe, in the current year and after an optimistic January, by February we can already talk of a spring revival in full bloom, in which both developers and individual investors take part.
Strong Start to the Year
This year’s January, although satisfactory for the beginning of the year and the expectations of the real estate market participants, did not predict a major shift in the previously weakened dynamics of housing construction data. Rather, it signaled the prospect of maintaining them at average levels in the foreseeable future, with a chance for progress in circumstances of possible enhancement of market conditions.
However, already in February, we see a strong revival of investment activity in the statistics of started residential developments, which are crucial for assessing the current economic situation and its prospects. In the second month of the year, 20.5 thousand flats were started, which is a result better by a whole 90 percent year on year. Meanwhile, as the RynekPierwotny.pl portal notes, developers themselves started building well over 14,000 units, which more than doubled the dynamics of these monthly data year on year. However, a low base draws the attention here. We are comparing the best result since June 2022, i.e., the last month before the medium-term collapse of GUS housing construction data, with one of the worst monthly results in recent history, namely February 2022.
In total, construction began on 36.3 thousand flats and houses in the first two months of the year, an increase of 79 percent year on year. In turn, developers themselves started building over 26,000 units, a result 111 percent better than that achieved in the same period last year. It gives the overall effect of a strong emphasis on the improvement of the investment climate.
New Permissions Also with Promising Potential
In the case of statistics for new building permits or notifications with a construction project, February confirmed the stabilization of data at a relatively high level, ongoing since September last year. The GUS last month reported a total of 21.4 thousand of them, 4 percent more month-on-month, but in a year-on-year relationship it is already a third better result.
As we know, statistics for new construction permits remain a relatively reliable parameter for assessing the potential market demand in future periods by developers. Their February result at the level of 15.5k is higher compared to the preceding January by 6 percent, and year on year by over 42 percent. Unfortunately, this is partly the effect of the collapse of statistics at the beginning of 2023, and thus like with started flats, the base is record low. Nevertheless, the volume of new permits achieved by developers in February should be considered extraordinarily optimistic and bodes very well for the development of the economy in the coming months.
Housing Handovers at Average Levels
Recently, in the GUS housing construction data, statistics of flats handed over for use are maintaining an average level, to which they attempted to return in February after the January slip. In total, 16,000 flats were handed over, almost the same as in February last year and 9 percent more month on month. Since the beginning of the year, just under 31,000 flats have been handed over, which results in a 12 percent worse result year on year.
In turn, the bounce of these GUS data in February is the effect of improved developer activity, their result of nearly 10,000 finished units means progress both year-on-year and month-on-month by about one fifth. In turn, in both months of this year, companies handed over over 18 thousand flats, which is a result a few percent worse than analogous from last year.
The latest data from GUS residential building clearly suggest that spring in the investment segment of national housing this year arrived in February. The optimistic significance of statistics, to which developers contributed to the greatest extent, is likely due to final government decisions regarding the new program of mortgage loans subsidies. Market prospects seemed to investors and entrepreneurs so credible and promising that they finally decided to significantly boost their production capacities. This should significantly limit the potential for price growth of new flats in the coming months of this year, which remains the main risk factor for economic development in the foreseeable perspective of the coming months.
Author: Jarosław Jędrzyński, expert of the RynekPierwotny.pl portal.
