Poland is entering the phase of economic recovery. Although the improvement of the economic situation is quite arduous and not entirely certain in the face of many challenges, especially the impact of the situation on foreign markets, the economic growth in Poland forecast by Coface at the level of 2.8 percent. in 2024 will be a much faster pace than the measly 0.6%. recorded last year. Will the economic acceleration translate into an improvement in the situation in the construction industry?
Author: Grzegorz Sielewicz, chief economist of Coface in Central and Eastern Europe
The construction industry consists of several segments that may develop at different rates. One of the frequently mentioned segments is the residential segment, whose share is approximately 20 percent. construction market in Poland. After a favorable economic situation, supported by growing purchasing power of households, increased rental investments and low interest rates, the market collapsed, along with growing uncertainty intensified by Russia’s full-scale aggression against Ukraine.
In addition, there was a dynamic increase in interest rates, which started in Poland in October 2021, and the high level of which currently remains, even despite the interest rate reduction cycle that started in September last year.
Nevertheless, housing prices are still on an upward trend, which will continue in 2024, and the slowdown has been expressed on the demand side.
In the period January-November 2023, the number of apartments under construction decreased by 4.6%. compared to the same period of the previous year. The number of apartments whose construction has started decreased by 8.3 percent, and the number of building permits or project applications decreased even more – by as much as 21.1 percent.
As a result, the further we look at the data illustrating future trends in housing construction, the more pessimistic the picture appears.