Construction market in Poland likely to rebound in 2025, says ING

The construction market in Poland is likely to experience a larger rebound in 2025, although residential construction may pick up in the second half of this year, new data from ING has suggested.

In June 2024, construction output in Poland contracted by 8.9% year-on-year, following a 6.5% year-on-year decline in May. The decrease in June was partly due to having one fewer working day compared to June 2023.

Market conditions

“While we have seen an increase in capacity utilisation in construction, the current overall condition of the industry remains very weak,” ING economists Rafal Benecki and Piotr Poplawski said.

Year-on-year declines were recorded across all categories, the data showed. Civil engineering construction saw a 0.9% YoY contraction, improving slightly from a -6.6% decline in May.

This decline was driven by a significant drop in activity during the transition period between the previous EU budget perspective in 2023 and the slow initiation of projects under the Recovery and Resilience Facility (RRF) and the new budget.

Building construction decreased by 17.9% YoY in June, following a -5.4% drop in May. This decline is attributed to weaker activity among residential developers.

“Demand for new properties slowed down after the previous government’s housing market support programme was exhausted,” Benecki and Poplawski said. “According to companies analysing the real estate market, more apartments were put on offer in recent months than were sold. The large increase in housing prices in 2023/2024 has also meant that even with public support, many people cannot afford their own property. The condition of commercial construction is also likely to be weaker, either due to the saturation of the warehouse space market or generally weak business investment.’

Signs of recovery

However, there are some signs of recovery in the housing market. The number of housing starts increased by 58.9% year-on-year. However it is still uncertain when a new mortgage support programme being developed by the government will be introduced, ING noted.

“The large number of new construction starts, however, may suggest that developers are preparing for a resurgence in demand,” the economists noted.