The Polish housing marketplace was on the brink of a deep crisis. The latest figures of the Central Statistical Office for May 2024 paint a image of violent braking, which may have serious consequences for millions of Poles dreaming of their own M. Developers, which are the drivers of construction, are massively halting fresh projects and the number of investments started is decreasing at an alarming rate. This is no longer a momentary hesitation, but a clear and worrying trend that announces hard times for both buyers and the full economy.
The statistic are ruthless. In May construction began by 6% little apartments and houses than in the same period last year. What is even more symptomatic, the investment activity of improvement companies has fallen to the lowest level since mid-2023. This means that in the future the marketplace will be hit by much little fresh premises, which could lead to a further wave of price increases in view of rising demand. Experts are beating the alarm, indicating that the marketplace has stopped breathing, and decisions on further steps are put distant for an unspecified future.
GUS data leaves no illusions. Construction rapidly inhibits
May publications of the Central Statistical Office became a cold shower for all property marketplace observers. The decrease in the number of buildings started by 6% per year is simply a signal that cannot be ignored. In practice, this means thousands of housing that will not be built in the next 2 years. Even worse is the situation erstwhile we look only at the improvement sector – this is where the slowdown is most felt. Companies that have so far dynamically launched successive stages of settlements now pull the safety brake.
Also worrying are data on the dwellings put into service. In May there were just over 15,000, which is 9% decrease compared to April. Although this number is inactive higher than a year ago, monthly dynamics shows a clear failure of momentum. This is the consequence of investment decisions made respective months ago, but the current suspension of buildings will have its painful consequences in the future, creating a supply gap hard to fill.
Another indicator of problems is the decreasing number of construction permits issued. It's a litmus paper of investor sentiment. Since developers do not apply, this means that they do not plan to start fresh projects in the coming quarters. This trend confirms that we are dealing with a thoughtful strategy of waiting, not a momentary stumbling.
Why are developers holding their breath? Main causes of the crisis
Decisions to halt investments don't come out of nowhere. They are the consequence of a cool business calculation in which the hazard begins to outweigh the possible profit. Currently, respective negative factors have been imposed on the property market, creating a toxic mix of uncertainty.
The first and primary problems are ever-increasing costs. The prices of building materials, although stabilised after pandemic and war shocks, stay high. There are besides expanding labour costs resulting from wage pressures and shortages of skilled workers. Each of these elements increases the cost of building a square metre apartment, which forces developers to rise final prices.
The second key origin is huge uncertainty regarding monetary policy. Maintaining advanced interest rates by the Monetary Policy Council straight affects Poles' creditworthiness. Developers fear that even if they build fresh settlements, there will be no willing to finance the acquisition of costly mortgages. The deficiency of clear signals from the government and the central bank on future support programmes (such as the successor to Safe Credit 2%) and the prospects for interest rate cuts paralyse the decision-making process. Under specified conditions, it is safer to suspend the investment than hazard building housing that will not find buyers.
Individual investors will not save the market. The situation is serious
In CSO statistics, it can be noted that the section of individual building, i.e. people building homes for their own needs, remains comparatively stable. Unfortunately, the scale of these investments is besides tiny to offset the massive decline in developer activity. Privates are liable for much of the built single-family homes, but developers are the main supplier of housing in cities where request is greatest.
However, even this section is not full resistant to turbulence. expanding construction costs and more hard access to mortgages besides affect individual investors. Experts inform that if banks do not mitigate their credit policies in the second half of the year and economical uncertainty persists, we can besides see a clear slowdown here. The marketplace cannot number on Poles to massively build houses to patch the gap left by developers.
This situation shows how much the housing marketplace depends on the condition of large developers and the stableness of the macroeconomic environment. erstwhile developers get sick, the full manufacture gets fever and patients become homeless.
A collapse or a pause? Experts draw 2 scenarios for Poles
The most crucial question now is: are we witnessing a temporary correction or the beginning of a long-term breakdown? No 1 is able to give a clear answer, but 2 likely scenarios can be drawn for the coming months.
- Optimistic script (momentary pause): In this option, developers will return to investment as shortly as the marketplace environment stabilises. Possible interest rate cuts, the introduction of a new, predictable programme to support borrowers and the stabilisation of material prices will be key. If these conditions are met, investors can regain assurance and restart frozen projects.
- Pessimistic script (start of collapse): If advanced interest rates and uncertainty persist for longer, the slowdown may deepen. The long-term suspension of the buildings will lead to a deep supply gap. There will be less and less fresh housing in the market, which, contrary to the logic of the economical slowdown, could lead to... a sharp increase in prices. Limited supply with inactive existing, albeit weakened request is simply a simple recipe for expensiveness.
Regardless of which script will be implemented, 1 thing is certain: the Polish housing marketplace has reached a turning point. The coming months will be crucial for the future of housing prices and availability of premises for millions of Poles. Anyone who plans to buy a property should closely follow the upcoming economical data and political decisions.
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The CSO confirms the worst fears. Developers halt investing in Poland
