According to the latest data from the Central Statistical Office (GUS) on residential construction for the period from January to November 2024, there has been a clear weakening of the statistics, particularly regarding the key indicator of new housing starts. The question remains whether the investment activity of developers, which had a surprisingly positive performance in October, is now facing another wave of decline.
In November, a decline in residential construction statistics occurred in all three categories of GUS data, with both developers and individual investors contributing to this trend. As experts from RynekPierwotny.pl note, developers performed poorly in all three data categories, with a significant drop in the number of new housing starts.
In November, the construction of just 16.4 thousand homes and apartments began across all investment categories, reflecting a modest year-on-year increase, but a nearly one-third drop compared to the previous month, October. Over the first eleven months of 2024, over 221 thousand units were started, which is a nearly 27% increase compared to the same period last year.
Developers alone initiated over 144 thousand new projects since the beginning of the year, representing an impressive 40% year-on-year increase. However, November saw a weak performance, with only 11.4 thousand new units for sale or rent being started, 28% less than the previous month. This represents the weakest result of the year and calls into question the optimistic outlook that had emerged in October. As RynekPierwotny.pl experts point out, the monthly volume of new apartments started by developers has sharply returned to relatively average levels. It may indicate the growing dominance of supply over demand for new apartments, and it might be exceptionally difficult to balance this in the foreseeable future.
There was a slight slowdown in November in the statistics for new building permits or project submissions. The total number of decisions in November, just under 22.6 thousand, was 7.5% higher year-on-year but 7% lower compared to the previous month. This decline was primarily driven by a significant drop in permits from individual investors. Meanwhile, the year-to-date result, standing at over 267 thousand, represents a 22% increase compared to the same period in 2023.
Developers have shown significantly more activity in terms of new building permits in recent months. In November, they accounted for 16.5 thousand decisions, maintaining a year-on-year increase of 16% and a slight month-to-month increase. This data category remains strong for developers, but this may be more the result of the above-average number of applications submitted before last year’s changes to technical standards than a demonstration of optimism from developers.
Meanwhile, statistics for apartments completed for use, which are less significant for assessing current market conditions, continue to show monthly variability at a relatively stable level since the beginning of the year. The overall result for November, just under 16.5 thousand, was slightly worse compared to the previous month and one-tenth lower year-on-year. A similar year-on-year decline in completed apartments was noted in the January-November period, with this year’s total standing at 179 thousand.
The decline in all three categories of GUS residential construction data in November can largely be attributed to seasonality and should not indicate a permanent slowdown in developers’ improving investment activity. For nearly all years, the last two months have shown a clear decline in residential construction statistics for both developers and individual investors. In this context, the results achieved in November should still be considered quite satisfactory given the current times. The question remains whether we can expect a clear improvement in these results starting in January of the new year.
The final cancellation of the “Start Housing Loan” subsidy program is unlikely to weaken demand for housing loans. On the contrary, demand may begin to gradually recover. Furthermore, the potential realization of the government’s alternative initiative in this area could become a stronger stimulus for the housing market recovery starting in mid-next year.
Additionally, the recent news about the influx of tens of billions of zlotys from the National Reconstruction Plan (KPO) presents a potential factor stimulating GDP growth and economic recovery, which will positively impact the domestic labor market and wage growth. This situation will inevitably increase demand for apartments. Therefore, in the coming months, it seems more likely that developers will increase new construction statistics rather than restrict them.
Author: Jarosław Jędrzyński, expert at RynekPierwotny.pl
Source: ManagerPlus.pl
