November data from the Central Statistical Office (GUS) on housing construction in Poland indicate that the positive impact of the housing sector on the Polish economy will weaken in the coming months. The two largest groups of entities building apartments and houses in Poland – developers and households – are completing significantly fewer housing projects compared to the past five years. The optimism seen in October has vanished.
According to the latest GUS data, the number of completed housing units in Poland in November was slightly lower than the previous month and significantly lower than a year ago. In November, all investor groups collectively delivered 16,500 units, which is 3.5% less than in October and 10% less than last year. Developers handed over 10,700 apartments, reflecting a 3.5% increase compared to October but an 11% decline compared to November last year. Despite this month-to-month increase, the November result is consistent with the number of units delivered by developers in previous months of 2024. It is even higher than the average for the first 10 months of this year. The year-on-year decline compared to last October is a natural consequence of the very low number of construction projects started by developers two years ago.
It is impossible to objectively analyze this year’s GUS data on completed units by developers without considering the number of projects initiated in the second half of 2022 and the early months of 2023. It is important to remember that a combination of unfavorable market and legislative factors caused a supply-side stagnation in the housing market during that period. As a result, the number of construction starts by developers dropped from 12,000-13,000 units per month in 2021 and the first half of 2022 to 7,000 in the second half of 2022.
Developers account for 64% of all housing units completed in November. With developers performing better than in October and individual investors performing worse, the latter’s share in the overall number of completed units decreased from 35% to 33%. Compared to November 2023, households (termed “individual investors” by GUS) completed 8% fewer houses/apartments. Their performance was also 9.7% worse compared to the previous month.
The declining number of completed housing units, visible in month-to-month comparisons, is confirmed by year-to-date cumulative data. By the end of October, developers had delivered 110,400 housing units, 10% less than the previous year, while individual investors had completed 63,000 units, a 13.5% decrease compared to the same period in 2023. All indications suggest that year-on-year declines in housing completions will continue for the next few months. Importantly, the results for the entire fourth quarter of this year will be significantly worse not only compared to 2023 but also to 2021-2022.
In November, efforts by various investor groups to obtain building permits yielded better results than in October. However, for several months, GUS data in this category have remained relatively stable. While this reflects the rationality of entities planning new projects, it also indicates a cautious wait-and-see approach among all investor groups. This caution may result in stagnation in Poland’s housing construction sector in the coming years.
The total number of building permits issued in November was 22,600, of which developers received 16,500 permits and individual investors only 5,700. The total number of permits issued in November was 7% lower than in October. However, compared to November last year, the number of building permits increased by 7.5%, thanks to higher developer activity. Unlike the previous two months, households showed significantly lower year-on-year activity in applying for building permits.
The number of housing units for which various investor groups obtained permits from the beginning of the year to the end of November is significantly higher than last year. By the end of October, developers secured permits for a total of 188,100 housing units (28.8% more year-on-year), while individual investors obtained permits for 73,400 units (10.2% more year-on-year).
November’s statistics on construction starts across Poland indicate a sharp decline to the second-lowest level recorded by GUS in 11 months, after January. The number of construction starts dropped from 19,000-20,000 units in previous months to 16,400 in November. This decline was driven by both key investor groups: households and developers.
The total number of construction starts in November was 30% lower than in October but 2% higher than in November 2023. This significant month-to-month drop was mainly due to low developer activity, with developers initiating 32% fewer projects compared to the previous month. However, it is worth noting that October’s developer results were record-breaking, not just for 2024 but also compared to October figures from the past three years.
Current GUS data on construction starts should be interpreted in the context of building permit statistics. Since the beginning of the year, the gap between the number of permits issued and the number of construction starts by all entities exceeds 46,000, meaning 17% of permits have not led to actual construction. This figure is concerning, though it is important to note that by the end of October, individual investors began building almost as many homes as they had permits for. Therefore, the surplus is primarily due to developers, who postponed nearly one in four permits obtained this year (23%).
Author: Katarzyna Kuniewicz, Director of Market Research at Otodom Analytics
Source: CEO.com.pl
