Well over half of the cost of building any residential property is related to building materials. Therefore, their prices and prospects for shaping them in the near and distant future are an extremely important element of planning any investment on the housing market. In recent years, one of the crowning arguments of inevitability housing price increases there was a widespread perception of an “eternal boom” in the building materials market.
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Meanwhile – what you might want to know – trends in the building materials market are predominantly determined by the monthly signaling data from the Central Statistical Office on housing construction. This mainly applies to the statistics of newly started construction sites and new building permits, which primarily determine the current and expected future demand for building materials. In other words, it’s not exactly that housing prices are rising because building materials are becoming more expensive, but the more expensive building materials are the result of the growing demand for flats and the investment boom in the housing sector. As it turns out, the latest data from the Central Statistical Office of housing construction indicate that investors’ activity is returning to pre-pandemic levels. The question is whether the building materials market is still doing well.
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According to the monthly data of the Polskie Składy Budowlane (PSB) Group, the boom on the domestic market of construction materials continues, although it seems to be losing momentum from month to month. Out of 20 monitored product groups, this year’s July saw increases in 14 cases, and price drops in 6, year-on-year.
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Thus, we can talk about an increasingly noticeable weakening of the upward trend. In 2019, the number of product groups with negative y / y growth did not exceed two cases per month. In the first months of this year. it reached the level of three cases to reach the volume of as many as six items in July. Hence the conclusion that even before the end of 2020, most commodity groups of building materials will probably be communicated in PSB’s analyzes with negative year-on-year price growth.
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Similar conclusions can be drawn from the analysis of the data on the average dynamics of changes in prices of building materials in relation to y / y. Last year, it fluctuated at the level of almost 4%, and now it has dropped to an average of less than 1.6%. and only 1.4 percent. in the month of July. So you can clearly see a downward trend with the target point close to zero, perhaps in a few months.
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As it can be seen, this time the building materials market did not wait for a major weakening of the CSO statistics construction and initiated a correction trend of a very strong upward trend of several years at the end of 2019. The further scenario of the development of the situation will depend on the evolution of the parameters of the entire national economy in the short and long term. On the one hand, high inflation will be a factor limiting the deeper decline in this category of goods, on the other, in the economic slowdown, it will be difficult for producers and distributors to keep prices at the current level.
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One way or another, it seems a foregone conclusion that in the long run, the price trends on the building materials market will not play the role of the main stimulus of the boom in the primary segment of the domestic housing sector. On the other hand, it is difficult to judge whether and to what extent they can contribute to a possible correction of flat rates first-hand.
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