No more a seller's market
Analyst forecasts last spring stating the market would stabilize over the course of the year are proving correct, as prices level out overall following an initial dip between three to 30 percent for most materials, including plasterboard, mineral wool, bricks, silicates and steel.
However, conflicting media reports on price fluctuations for construction materials give a fuzzy picture of the market, which has been observed closely since prices shot up to record levels at the beginning of the year in the wake of a construction boom. Between March and May of this year, a shortage of bricks, for example, drove their price per unit to soar from zł.6.70 to zł.10.60. Accelerated imports from other EU states over the summer whittled that figure down to zł.9.50 this July.
As for reports of increases, which pointed to numbers at the level of 100-150 percent, these should be treated as rare, one-off exeptions, according to CEE Property Group's Paweł Grzàbka.
"These figures refer to certain time periods in select Polish cities where there was a temporary shortage in stock that took several weeks to replenish, particularly in the Mazowieckie voivodship," says Grzàbka. "On the other hand, areas in the west of Poland experienced the opposite case as there is a steady supply of materials from Germany," he adds.
Price stabilization
Currently, stock is said to be at capacity across the country, and analysts aren't expecting prices to fluctuate much further in the near future.
"Increases earlier this year brought local prices up to EU levels," says Grzàbka. "Today, prices fluctuate from several to 10-odd percentage points, but a longer-term drop across the board is not sustainable."
Grzàbka attributes the slight drop in prices to a cut in profit margins by suppliers. Bogdan Panhirsz, director of one of Poland's largest construction materials suppliers Polskie Składy Budowlane (PSB), agrees. "Wholesale suppliers must sell off their stock even if that means taking a loss," said Panhirsz.
"The market is now saturated and it will no longer allow further price increases, particularly as the summer season has contributed to a temporary slowdown on the market, reducing pressure on suppliers," he added. Similar observations from construction market analysts and players hold fast to forecasts that the market will soon stabilize.
Unfinished business
Still, Panhirsz sees the potential for prices to rise for finishing materials for projects entering the final phases of construction as the market for these has not yet recovered ground in terms of stock. Increased operational and labor costs, along with rising prices for raw resources, will contribute to marginal increases for labor-intensive items in the future.
"A great deal also depends on the seven-percent VAT rate, set to time out next year. If the 22-percent rate is implemented instead, the rush to stockpile materials in anticipation of the new law will bring about a new wave of sales activity on the market, driving prices up again," says Parnhirsz.
