The December data from the Central Statistical Office (GUS) processing residential construction from January to November announced a hiatus in the moderate upward trend ongoing since spring. This mainly concerns the most crucial indicators for the current economy – started apartments and new permits. The question arises whether the investment activity of developers, which quite positively surprised in September and October, is leaning towards another wave of decline.
As the experts from RynekPierwotny.pl notice, in November, a regression in residential construction statistics occurred in all three categories of GUS residential construction data. Both developers and individual investors contributed to this situation.
In November, across all investment categories, the construction of just 16,000 apartments and houses began, which still represents a year-on-year increase by one-third. However, this is solely the result of a low base from the investment slump the previous year. In relation to the previous month, there was a clear decline by 18%. In total, almost 175,000 units have started construction throughout the eleven months of the current year, down more than 8% compared to the same period in the previous year.
Developers themselves have launched over 103,000 new projects since the beginning of the year, marking a relatively small 4% year-on-year regression. However, November performed rather weakly, with construction of just under 11,000 units starting, down 11% compared to the previous month. Experts from RynekPierwotny.pl explain that the monthly volume of apartments started by developers is consolidated at a relatively average level, in no way guaranteeing to satisfy the demand generated by the mortgage subsidy program in recent months.
The statistics of new construction permits or notifications with the construction project, which recently recorded the largest revival, also underwent a similar slowdown in November. The total number of administrative decisions in November was approximately 21,000, a 7% improvement year on year, but a 14% decrease compared to October. The result from the beginning of the year, standing at 219,000, is over one-fifth worse than achieved in the corresponding period of 2022.
In recent months, developers have shown clearly increased activity in terms of new permits. However, the level of 14,000 administrative decisions they achieved last month marked a definitive decline of over 17% month on month. However, according to RynekPierwotny.pl, in the case of this category of data, it seems very likely that developers will continue to actively acquire new permits due to the perspective of changes to the regulation on technical conditions, which will come into force from the second quarter of the new year.
Meanwhile, the statistics of ready-to-use flats, the least important for the development and assessment of the current economy, continue to fluctuate on a relatively steady level since the beginning of the year. The total result in November is almost 19,000 units, nominally worse month on month and weaker by 27% year on year. Such a significant regression results from a very high base coming from the record result of flats ready a year ago. The result from the beginning of the year, standing at almost 200,000 units ready for use, is 7% worse than achieved in the same period last year.
This time, the interpretation of the solid decline in all three categories of GUS housing construction data is not particularly complicated. As explained by RynekPierwotny.pl, it is mainly due to their seasonality and should not herald a reversal of the developers from their month-to-month improving investment activity. Virtually without exceptions, the last two months of every year are characterized by a clear drop in GUS housing construction statistics, both for developers and private investors. In this context, the results achieved in November must be treated as quite satisfying as for the current times. The question is whether to expect their marked improvement as soon as from January in the new year.
For now, participants of the national property market do not have enough knowledge needed to predict the development of the economy in the primary housing segment in the coming months. The new governing coalition has not yet presented specific assumptions for its housing policy. It is still unknown, for example, what to expect from the BK2% program, whose prospects have a decisive impact on the future of supply and demand relationships in the housing market and, consequently, on developers’ investment decisions.
Author: Jarosław Jędrzyński, expert from RynekPierwotny.pl
