Central Statistical Office confirms – real estate investment dynamics are declining
The data leave no doubt
According to the CSO report, from the beginning of the year to the end of July, 136,000 construction projects were started. This is approximately 20.% less investment projects initiated than a year ago. Developers started construction of 79.9 thousand apartments (22.1% less), and individual investors 54.0 thousand (16.6% less).
The number of residential units for which construction permits were issued or notifications with a construction project were made decreased by almost 4% compared to the same period last year.
At the same time, 127,000 apartments were handed over for use, an increase of just over 2% compared to last year. It is worth remembering that the projects under which the currently handed over apartments were built started on average about 2 years earlier.
It’s been a good thing, and the worst is yet to come?
Analyzing the CSO data, it is worth noting that the parameters of new investments are declining not only year-on-year, but also from month to month, with July being the one to see a significant bump. This may have something to do with the fact that since July a new developer law has been in force which imposes new, stricter obligations on developers towards consumers , a fact that may partly explain the caution in starting new investments.
There is a strong sense of pessimism in the mood of developers. As an expert from the Polish Association of Real Estate Development Companies, quoted by the Polish Press Agency, points out, “Investors – given the current economic situation – are forced to halt new construction. In the long term, this means a sharp decline in the supply of new apartments, the effects of which will be observed especially in 2024,” when occupancy permits will most likely be issued for currently commenced constructions.
Impact on consumers and investors
A decrease in the supply of new apartments, whether for individual housing or investment purposes, will almost certainly cause their prices to rise over the next few years. At the same time, inflation and increasingly unaffordable housing loans will result in lower demand for apartments, which will not encourage developers to intensify supply either.
Nevertheless, according to a real estate market analysis published by PKO BP, we can paradoxically expect a drop in housing prices in the next few months. Currently already built apartments or started investments, due to the drop of money’s purchasing power and high construction costs, will not be sold at exorbitant prices, due to the lack of creditworthiness of prospective buyers. This may therefore prompt developers to launch projects with lower price offers.
Lawyers in the real estate department of our firm offer specialized advice also at the stage of searching for and evaluating investments in all types of projects in the real estate market in Poland, which, with the current dynamic changes, can help achieve the desired goals.
Sources for the study:
- CSO data,
- PKO BP announcement.