Poland’s housing construction data for October is surprisingly optimistic. The two largest groups of entities building flats and houses in Poland – development firms and households – are acting successfully despite the lack of clear declarations from the government about the housing policy that will be implemented in the coming years. Developer firms have even shown clear signs of a revival, the most stark sign of which is the beginning of construction on a record number of nearly 16,000 flats. Households (or individual investors) also decided to begin construction on a significantly larger number of residential units than in the two previous years. Unfortunately, communal and social rental construction is not only unable to keep up with the leaders in housing construction in Poland, but even improve its results from 2023.
According to the latest GUS data, the number of flats handed over in Poland in October was slightly higher than the previous month, but clearly lower than the previous year. In October all investor groups handed over a total of 17.1 thousand units, which is 3% more than in September and 17% less than a year ago. Developers handed over 10.3 thousand flats from this pool, which is a decrease of 7% compared to September and as much as 27% compared to October of the previous year. Despite this small percentage decrease month to month, October’s result does not deviate from the number of flats handed over by developer companies in the previous months of 2024. The decrease compared to October of the previous year is a natural consequence of the very low number of starts from two years ago.
We cannot objectively analyse and assess this year’s GUS data presenting the numbers of flats handed over by developer firms, without having in mind the number of starts by these firms in the second half of 2022. It is important to remember that a combination of unfavorable market and legislative factors caused several months of stagnation on the supply side of the housing market at that time. The result was a decrease in the number of starts by developers from 12-13 thousand per month in 2021 – the first half of 2022 to 7 thousand in the second half of 2022.
Developer firms account for 60% of all units handed over in October. In the situation of poorer results of developer firms and significantly better results of individual investors, the share of the latter in the total number of handed over units increased from 32% to 35%. Compared to October 2023, households (in GUS terminology these are individual investors) completed only 1% fewer houses/flats, but compared to the previous month their result was 14% better.
The pessimism resulting from the comparison of GUS data month to month is confirmed in the data presented in the form of a cumulative amount of completed units from the beginning of the year. By the end of October, developer companies handed over 99.9 thousand flats and houses, i.e. 10% less than a year ago, while individual investors 57.7 thousand units, i.e. 14% less than in the comparable period of 2023. It appears that we will be dealing with lower year-on-year results in the category of flats handed over for use for the next few months.
The October effects of different investor groups’ efforts to obtain construction permits yielded better results than in September. However, for several months, the GUS results announced in this category have been very similar and testify to the great rationality of entities planning to implement houses and flats.
We know from aggregated data for 12 and 36 months that the number of permits for the construction of residential units still clearly exceeds the number of starts in comparable periods, which means that there is a clear surplus of construction permits, which significantly increases the possibilities of supplying the market with new supply, particularly by developer companies.
It is worth remembering that since August 1, new technical conditions to which new buildings and their location should conform are in force. This change will certainly influence the design and profitability of multi-family buildings, so many developer firms focused on submitting the application for a permit under the conditions that were in force before the amendment of the regulation on technical conditions. In this context, it was plausible to assume that we would see a decline in the activity of developer companies in terms of submitting permit applications at the end of the year, but at the same time in GUS statistics we should observe an increase in the number of permits obtained. Data from the last two months do not confirm these assumptions.
The total number of permits issued in October exceeded 24 thousand, of which 16.4 thousand permits were obtained by developers and 7.4 thousand by individual investors. Therefore, the sum of October permits was 5% higher than in September. Compared to October of the previous year, the number of construction permits decreased by 1.5%. As in September, it was households rather than developer companies that showed clearly more activity than a year earlier in this category.
The number of residential units for which different investor groups obtained permits to build from the beginning of the year to the end of October (accumulatively) is significantly higher than a year ago. By the end of October, developers obtained permits to build a total of 170.7 thousand flats and houses (29.5% more y/y), and individual investors 67.7 thousand (11.6% more).
October statistics of construction starts throughout Poland indicate a sharp recovery. The number of starts jumped from 19-20 thousand in several previous months to 23 thousand, mainly due to the exceptional activity of development companies.
All investor groups began construction of 23.4 thousand residential units in October, 21% less than in September and 18% more than in October 2023. This significant increase is mainly the result of actions taken by developer companies, which began construction of a larger number of units – compared to September by 35%, and compared to October of the previous year by 30%. The October results for developer companies in this category are record-breaking for the 10 months of 2024.
We should interpret the current GUS data on construction starts in the context of permitted statistics. Since the beginning of the year, the difference between the number of permits obtained and the number of construction starts has been almost 39 thousand, which means that 16% of the permits obtained have no continuation in the constructions taking place. This result is cause for concern, although it should be noted that by the end of October, individual investors started to build a larger number of houses (mainly) than indicated by the number of permits obtained. This was possible thanks to the surplus permits from previous years, which should be positively assessed.
In this context, it is startling (and possibly even concerning) to read the results of the developer companies, which since the beginning of 2024 postponed 22% of permits obtained. However, October was the first month this year when, on a nationwide scale, the surplus of permits over construction starts by developers stabilized at the level from September. Also, when we compare the number of permits obtained by developers in the last 12 months with starts in the same period, it turns out that compared to the two previous years, the situation is improving.
Katarzyna Kuniewicz, Director of Market Research, Otodom Analytics.
Source: https://ceo.com.pl/deweloperska-szarza-pazdziernikowe-dane-gus-o-budownictwie-mieszkaniowym-z-optymistycznymi-sygnalami-54698
