A house instead of a flat - the housing situation in Poland during the pandemic
The negative effects of the COVID-19 pandemic have not spared the construction market. The largest declines in the construction industry in the EU were recorded during the first wave of the pandemic. In April, construction production in the EU fell by as much as 16.3% (2015 = 100). In the following months it grew, but not enough to return to pre-crisis values.
Of course, the impact of the pandemic on the construction industry varied from country to country due to the timing and stringency of the restrictions imposed. The most negative effects were noticed in Italy and France. In Poland, after the first wave of COVID-19, the construction sector turned out to be one of the most resilient to its negative effects, with the residential market performing by far the best. In 2020, 221,978 new homes came onto the primary market - which is 7. 0% more than in 2019. However, the boom in housing construction so far has been mainly due to the good economic situation (low unemployment and rising wages) and low interest rates on housing loans. In turn, low interest rates on bank deposits contributed to the increase in demand for apartments purchased for investment purposes.
However, the pandemic has effectively frozen the market for rentals, which is causing and will continue to cause declines in investment purchases. The number of dwellings completed is not the best parameter describing the current situation on the market, as it is a result of investments started 2 years earlier. More important, from the point of view of current and future situation on the housing market, are the indices illustrating the number of apartments which construction has started and the number of issued permits.
In 2020, the construction of 223,842 flats began, i.e. 5.7% less than the year before. The number of constructions starts was clearly influenced by the COVID-19 pandemic, in particular by the spring lockdown, as evidenced by the data analysis. In April and May 2020, developers started almost 50% fewer new residential investments than last year (growth rates of -46.2%, 44.6%, respectively), focusing at that time on completing the commenced projects. In addition, pandemic-related administrative procedures dragging on and on translated into losses that developers were not able to make up, despite the record high housing starts set in September - 17,007 units.
There were 13,439 fewer housing starts in all of 2020 than in 2019. The second indicator showing activity in the housing market is building permits issued. Despite COVID-19 related administrative impediments to these decisions, 275,938 housing units were permitted or filed for construction in 2020 - 2.8 percent more than in 2019.
Despite the many fears posed by the COVID-19 pandemic, the fact that there are still many residential buildings to be built and modernized in Poland remains unchanged. The feeling of security that a roof over one's head provides is a paramount need of every human being.
For a long time now, there have been opinions in the Polish market that the pandemic led to an increased interest in building a house. Social distancing and lockdown have made us more appreciative of the greater independence a home gives us. Human needs such as access to a garden, being able to have a barbecue, working and playing outdoors without having to wear a mask have become a hot topic gaining momentum.
As a result, Poles started to look for plots of land and then proceeded to obtain the appropriate permits. Analysing Google trends, it should be noted that by April 2020, searches for the keywords: plot, flat for sale, house for sale were at a relatively similar level. After April 6, 2020, there was a sudden and significant increase in searches for the search term "plot".
Poles began the search for their dream piece of land which resulted in 40.9% more permits and 30.8% more home construction starts in December 2020 than in the same month last year.
Source: Beata Tomczak-Majewska, ASM – Market Research and Analysis Centre