Polish housing construction downtrend could accelerate: ING

Polish housing construction is unlikely to improve this year and the downtrend could even accelerate till year-end, while positive industrial and commercial construction will not be sufficient to offset this, says ING Bank.

Polish construction output rose by 1.1% year-on-year in July, significantly below expectations of 2.5%. EU-backed infrastructure projects continue to be the main growth driver, while housing remains a major drag, the bank says in a note sent to Kallanish.

Civil engineering, which rose by 11.8% year-on-year, remains construction’s biggest growth driver. “This is most likely because there are still incomplete infrastructure projects planned under the last settlement year of the ‘old’ EU budget. The experience of previous EU budget perspectives allows us to assume that dynamic growth in this category will be maintained (or even accelerated) until the end of this year,” ING observes.

The construction of buildings, primarily residential, remains the weak spot, falling by 7.8% in July. The number of housing units under construction remains on a strong downward trend from record levels in the first half of 2022 but is still at a fairly high historical level.

“Combined with weak demand at the turn of the year, the result is a very high number of apartments on offer, enough to cover demand for many months. Therefore, even a significant increase in interest in housing related to the government’s ‘2% Safe Credit’ programme will not be enough to substantially improve housing construction this year,” ING says.

Major Polish rebar producer CMC Poland said last month that May-quarter performance was impacted by Polish construction activity decelerating and industrial production across Central Europe remaining muted.

Adam Smith Poland