The decline in the number of completed apartments and houses deepens the crisis in the construction industry. Industry debt at record levels

Luc Williams

Registered in BIG InfoMonitor Debtor Register and base BIK overdue debt of construction finishing companies has already exceeded PLN 490 million. Within a year, there were over 72 million unpaid liabilities of professionals in this category. For each of the 14 thousand There are an average of 34.3 thousand companies in debt. PLN arrears. The unpaid debts of parquet, tile, paint and wallpaper manufacturers are also growing and amount to over PLN 200 million in total – according to the data presented in the report.

As the authors of the report noted, the number of apartments put into use from January to April 2024 decreased by nearly 15%. y/y. The number of single-family houses being built is also decreasing. In 2023, 638 construction companies declared insolvency.

Lack of public and private investment

“The bad situation of the industry is undoubtedly the result restrictions on both private and public investment. Back in 2015 investments in relation to GDP were at the level of approximately 20-21 percent, at the average EU level, and then decreased to 15 percent. (…) There has been a decline in demand for construction services, both from public and private investors,” it was reported.

In 2023, 30 percent were created. fewer single-family houses than a year earlier, and data for the first quarter of 2024 show that the situation cannot be expected to improve quickly. A lower number of completed apartments and houses means lower demand for construction services and finishing materials – noted the authors of the report.

Prices of building materials are slowly starting to rise

Prices of building materials they continue to maintain a downward trend. In April, according to the PSB Group’s analysis, y/y prices of construction materials dropped by 3%. However, compared to March, there is already a slight increase of plus 0.7%, while in March, compared to February, it was still negative (-0.8%). This does not mean the final end of the declines, but it is the first reliable signal possible return of price increases within a few months – said the main analyst of BIG InfoMonitor, Dr. Hab. Waldemar Rogowski.

According to analysis PSB Groups in April 2024, there were price reductions in 18 product groups. The highest declines occurred in the OSB and wood groups (-17%), and price increases were recorded only in two commodity groups. The prices of cement and lime, as well as paints and varnishes, increased. “The main reason for the price decline is due to the fact that for about two years the Polish construction industry has been facing a significant decline in orders, and supply problems and high inflation in previous years forced it to increase inventories, which are currently being liquidated,” Rogowski commented.

Tile and tile producers in the most difficult financial situation

According to the report, producers of tiles and tiles found themselves in the most difficult situation. Average unpaid liabilities of debtors from this category amounted in April this year to over PLN 13 million compared to PLN 9.4 million in April 2022. In total, the industry’s outstanding debt exceeded PLN 144 million and accounts for 4.3%. entrepreneurs in this industry.

Manufacturers of wooden parquets also have outstanding liabilities of almost PLN 50 million. Their debt has been decreasing on an annual basis since 2022, but the analysis of data from the last 6 months shows an upward trend. The share of overly indebted companies in the entire sector is also growing. At the end of April, it was 7.6%, and the average unreliable debtor was in arrears of almost PLN 691,000. zloty.

The lowest debt among paint and wallpaper manufacturers

The smallest debt recorded in the BIG InfoMonitor and BIK databases was recorded in the case of paint and wallpaper producers. 74, i.e. over 8%, are over-indebted. operating, suspended and closed paint manufacturers who were reported as unreliable debtors. “Their unpaid liabilities are slowly but regularly growing and amount to a total of PLN 6.21 million. However, this is still less than the average arrears of only one manufacturer of tiles and tiles. The producers of wallpapers that are coming back into fashion are burdened with the smallest overdue debt. Out of 7 unreliable debtors in this This category accounts for PLN 263,000 in liabilities,” we read in the report.

“I believe that the current price drops will not stay with us for long. Material prices will most likely go up with the new construction season and the start of KPO investments. However, the real game changer may be the start of the post-war reconstruction process in Ukraine, which will result in a huge increase in demand for construction materials and labor, causing a dynamic increase in their prices,” predicts Waldemar Rogowski.

The reconstruction of Ukraine will accelerate the increase in prices of construction materials

BIG InfoMonitor collects and provides information on the payment credibility of market participants. The company maintains a register of debtors. The BIG InfoMonitor database contains approximately 6 million pieces of information about debts. It provides access to the databases of the Credit Information Bureau and the Polish Bank Association, thus providing a platform for information exchange between the banking sector and other sectors of the economy. (PAP)

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