If we believe that residential construction has an impact on economic growth in Poland, we must treat the August data from the Central Statistical Office (GUS) as a warning sign. The conditions for residential construction are becoming increasingly difficult year by year, so despite the increase in the number of building permits granted, the actual results in terms of the number of dwellings and houses delivered for use, are increasingly weaker.
The latest GUS data shows that the number of dwellings delivered for use in Poland is decreasing. In August, all investor groups together delivered 14,6 thousand units, which is 18% less than a year ago and 21% less than in July this year. Developers delivered 8.5 thousand units out of this pool, which is a decrease of 26% compared to July and 30% compared to August last year. This represents the worst August result in eight years (we must go back to 2017 to find a worse result than this year’s August result). Developers accounted for 58% of all the dwellings delivered this month. In the situation of significantly lower results of development companies than in July, in August there was a slight increase in the share of houses, mainly delivered by individual investors (share in the total number of dwellings delivered for use). Compared to August 2023, households (in GUS terminology these are individual investors) completed the construction of 3% more flats/houses, but the comparison with the previous month in this group of investors also does not look optimistic (18% less).
This unfavorable tendency is confirmed by data presented in the form of sums since the beginning of the year (cumulatively). By the end of August, development companies have handed over 78.5 thousand flats and houses for use, i.e. 9% less than a year ago, whereas individual investors 46.3 thousand units, i.e. 17% less than in the corresponding period of 2023.
The August efforts of various investor groups to obtain building permits yielded worse results than in July. Nevertheless, the results in this category should be considered surprisingly good. We must remember that as of August 1st, new technical conditions apply that buildings and their location have to meet. These changes could significantly affect the design and profitability of multi-family buildings implementation, so it could be expected that development companies will focus on obtaining permits on the terms that applied before the amendment to the regulation on technical conditions. As a result, after a period of increasing the number of permits obtained in the first half of the year, in August we should observe a noticeable decline in the activity of development companies and, as a result, a significantly lower number of permits obtained. The August data from GUS negatively verify these forecasts, but, taking into account that the time to obtain permits in Poland varies from several to even several dozen months, maybe the effects of this amendment will wait until next year.
It turned out that the total number of permits issued in August was 25,6 thousand, of which 17,9 thousand permits were obtained by developers, and 6,7 thousand by individual investors, and it was only 4% lower than in July. Compared to August last year, the number of building permits increased by 28%, mainly due to the noticeably higher activity of developers in obtaining permits than last year.
The number of residential units for which various investor groups have obtained permission to build from the beginning of the year to the end of August (cumulatively), is significantly higher than last year. Developers obtained permits to build a total of 138.3 thousand homes (an increase of 40.3% year-on-year), and individual investors 53.5 thousand (an increase of 11.9%).
August statistics of starts throughout Poland indicate a stabilization at the July level. All investor groups began the construction of 19.9 thousand residential units in August, which is only 0.4% less than in July and 10.6% more than in August 2023. The increase compared to the previous year and stabilization at the July level is primarily the result of actions taken by development companies, which have begun the construction of more units – by 8% compared to July and by 18.7% compared to August of the previous year.
GUS data on commenced buildings should be interpreted in the context of the number of permits granted. Since the beginning of the year, the difference between the number of permits obtained and the number of starts amounts to over 34 thousand, which means that 17% of the permits obtained do not continue in the implemented buildings. This result would not be alarming were it not for the fact that in the first eight months of the year, individual investors started more construction than the permits obtained. It was possible thanks to the surplus of permits from previous years, which is a positive phenomenon. In this context, the results of development companies, which have deferred 24% of the permits obtained since the beginning of 2024, should be read as surprising (or even alarming). This means that nationally the surplus of permits over the start-ups initiated by developers is gradually increasing. The answer to the question of how it is possible that nationally one in five permits to build housing obtained by development companies is not being used lies of course in geography-based details. We will be able to analyze and assess them when GUS publishes analogous data on the scale of construction for individual counties.
Katarzyna Kuniewicz, Head of Research at Otodom Analytics.
Source: https://ceo.com.pl/sierpniowe-dane-gus-sygnalem-ostrzegawczym-dla-rynku-budowlanego-w-polsce-97458
