The fall in housing construction in Poland will accelerate towards the end of 2023 – ING

In July, the volume of construction in the country grew by 1.1%, which is significantly lower than expected (2.5%)

Housing construction in Poland is unlikely to improve this year. The decline in the index is likely to accelerate towards the end of the year, while the growth of industrial and commercial construction is not enough to offset the fall in the overall indicator. This is noted by ING Bank, reports Kallanish.

At the end of July 2023, construction volumes in Poland increased by 1.1% compared to July 2022, which is significantly lower than expected (2.5%). EU-supported infrastructure projects continue to be the driving force behind overall construction growth in the country, while residential construction is holding back growth.

Civil construction grew by 11.8% y/y and remains the biggest growth driver.

“This is most likely because there are still unfinished infrastructure projects planned within the last settlement year of the EU budget. The experience of previous EU budgetary prospects suggests that dynamic growth in this area will continue until the end of the year,” the bank notes.

The weak point is the construction of buildings, primarily residential, which fell by 7.8% in July. The number of residential projects under construction continues a strong downward trend from record levels in the first half of 2022, but is still at a fairly high level.

“Weak demand at the end of the year, coupled with a large housing supply that could cover demand for many months, is dampening housing prospects. Therefore, even a significant increase in interest in buying a home, associated with the government’s 2% Safe credit program, will not be enough to significantly improve performance this year,” ING Bank comments.

Major Polish rebar manufacturer CMC Poland said last month that second-quarter results were affected by a slowdown in construction activity in Poland and lower industrial production in Central Europe.

As GMK Center reported, following the results of May 2023 production in the construction sector The European Union shrank by 0.4% compared to the same period in 2022. The construction of engineering structures in the EU grew by 3% y/y over the month, while the construction of buildings (residential and non-residential) decreased by 0.9% y/y.

According to Eurofer forecasts, this year construction volumes in the EU will decline by a moderate 0.5% and recover to +0.7% in 2024.