Development of Permit and Completion – H1 2017

Our permit-completion graphs about residential dwellings and non-residential buildings have been updated with the latest figures.

Here you can follow the developments on interactive charts for all the 8 Eastern European countries we are dealing with in EECFA + Hungary Buildecon is reporting about for EUROCONSTRUCT.

Residential permit-completion (number of dwellings)

Non-residential permit-completion (floor area and number of buildings)

Data compiled by: Janos Gaspar (EECFA Research, Buildecon)

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Housing market in Russia: Demand potential shaping future market dynamics

While in the EECFA Forecast Report Russia we estimate/forecast residential output, this article is looking at another angle of predicting housing market developments: demand potential in the Russian housing market (the number of households able to buy housing) as the main indicator of further market dynamics. Positive macroeconomic indicators in Russia currently are suggesting growth in real incomes and an increase in the population’s solvency, which in the near-term future is set to raise the number of households able to buy housing. This growth in demand potential will have a positive impact on residential output, yet, this is not something that will happen overnight: the Russian housing market is predicted to continue to slump for the time being. Nevertheless, the predicted growth in demand potential will play a major role in halting this drop, leading to an expansion in the housing market in 2019.

Written by Andrey Vakulenko – MACON Realty Group, EECFA Russia

‘North Valley’ Residential Complex in St. Petersburg – Source: http://www.severdol.ru

Having the largest share in total construction both in value and volume terms, the housing market is the engine of the whole Russian construction market. Any change – decline or growth – in the housing subsector may have a decisive effect on the Russian construction industry as a whole; as it was the case, in particular, during the crisis of the Russian economy in 2015-2016. In this period, the housing sector enjoyed an unprecedented level of state support (more details in the current/previous EECFA reports), which prevented the entire construction industry from collapsing.

The state of the housing market primarily depends on the ability of the population to purchase housing. Other market factors, such as the volume of supply in the market, the level of competition or the cost of housing are secondary. It is the ability of citizens to buy housing that ultimately determines the total volume of effective demand, which in turn regulates development activity and price trends in the local housing market. At the same time, the indicators of the population’s need for housing are also secondary in terms of the dynamics of the market situation; they are of an abstract nature and cannot be used to predict the situation in the market. The need for housing is a conditional market potential, which, without the ability to buy housing is never realized. The ability of the population to purchase housing is the real market potential, which – in most cases – is realized in transactions. The level of housing provision (need) affects only the nature of demand: investment purchase, purchase of a first home, improvement of housing conditions, among others. Continue reading Housing market in Russia: Demand potential shaping future market dynamics

Q2 2016 Permit – Completion results of EECFA countries

In Q2 2016 the number of permits issued in the latest 4 quarters for residential homes increased by 14% in the Balkan EECFA countries together, compared to the same period last year. Turkey registered a 10% growth in this term, while Ukraine’s Q1 2016 (latest available) figures are almost 30% up.

In case of non-residential buildings, permitted floor area remained at the same level in the Balkan as recorded a year ago, while Turkey saw a drop of 1% in Q2 2016, and Ukraine ended up 20% positive in Q4 2015 (latest available).

In Russia, residential completion of the latest 4 quarters decreased by 2% in Q2 2016 and non-residential completion stood at 1% in comparison with a year ago. (Russia-wide permit data is not available)

The updated interactive permit-completion graphs of EECFA countries are available here:

  1. Residential permit-completion (number of dwellings)
  2. Non-residential permit-completion (floor area and number of buildings)

On the residential graphs, the number of dwellings is displayed, and you can choose the countries and the data type. Besides these options, on non-residential graphs you can also choose the indicator type (floor area or number of buildings)

As we regularly issue forecasts, for us the most important question of this compilation is whether the newly incoming data are in line with our latest (short-term) forecast or not. So below we have highlighted some countries and tried to put the figures into this perspective.

  • Residential permit– Biggest growth rates: Serbia

Almost 13 thousand permitted dwellings in the Q2 2015 – Q2 2016 period translate to a 44% growth on comparable basis. This is supporting our view that completion could start increasing this year.

residential-serbia

 

  • Residential permit– Biggest growth rates: Ukraine

Permit reached an estimated 178 thousand in the last 4 reported quarters together, which is a 29% increase, while completion was above 110 thousand. It does not contradict our view that completion in 2016 will remain at around its 2015 level.

residential-ukraine

  • Residential completion – Biggest markets: Russia

In the Q2 2015 – Q2 2016 period 1 170 thousand dwellings were completed, a 2% drop on comparable basis. Data so far are in line with our expectations.

residential-russia

  • Residential permit – Biggest markets: Turkey

Almost 960 thousand dwellings were permitted in the last 4 quarters including Q2 2016, meaning a 10% increase compared to a year ago. Completion stood at around 725 thousand, 3% more than in Q2 2015. These are in line with our predictions.

residential-turkey


  • Non-residential permit – Biggest growth rates: Serbia

In Q2 2015 – Q2 2016, surpassing well its 2007-2008 level, 1.5 million m2 non-residential floor area was permitted, meaning an almost 100% jump from a year ago. This is supporting our optimistic outlook.

non-residential-serbia

  • Non-residential permit – Biggest growth rates: Slovenia

Slovenia is coming back from very low levels, in the Q2 2015 – Q2 2016 period altogether 735 thousand m2 non-residential floor area got permit, an increase of almost 60% over a year earlier. This is also in line with our positive outlook.

non-residential-slovenia

  • Non-residential permit – Biggest markets: Turkey

Permits for around 48 million m2 of non-residential floor area were issued in the latest 4 quarters until Q2 2016, which is virtually the same level than a year ago. This does not contradict with our soft-landing scenario. Completion is 11% in the positive territory in the Q2 2015 – Q2 2016 period against the corresponding period a year ago, but in case of non-residential sub-sector, the connection between output and completion is not as strong as in case of residential.

non-residential-turkey

  • Non-residential completion – Biggest markets: Russia

Coming down very slightly from the peak, in Q2 2015 – Q2 2016 around 30 million m2 non-residential floor areas were competed. Investment into non-residential construction has been shrinking recently, so this does not contradict our pessimistic outlook.

non-residential-russia


The interactive graphs are updated half-yearly, in between 2 report issuance. If you would like to have the row data in xls, feel free to contact us.

Data are from national statistical offices: NSI, Crostat, KSH, Insse, Rosstat, SURS, SORS, Tuik, Ukrstat

Q4 2015 Non-residential: permit – completion

viz_test

As almost all Q4 figures were published, we have updated our interactive graphs containing quarterly development of permit and completion in the countries we cover. Beside the residential market, now we have put together a similar one about non-residential buildings. The same 3 data types are provided and you can choose from floor area and number of buildings.

Looking at non-residential permits, a substantial growth is experienced on the Balkan. The only exception is Romania, but, for example in Serbia the permitted floor area is almost 100% above its 2014 level. The biggest countries of EECFA region suffer through, and all this is pretty much supporting the scenarios we have foreshadowed in our reports.

The interactive permit – completion graphs are available here:

1. Residential (number of dwellings)

2. Non-residential (floor area and number of buildings)

While putting together the non-residential figures, I became curious about how the levels are comparable to other European countries. Although some exact matchings have been found, the aim was rather to put the country level market sizes into another context (since we usually contrast them in money terms). The basis of the compilation is permitted non-residential floor area.

permit_comparison_2015

UK is not mentioned in this list, but it is most probable (based on the value of new non-residential construction) that its market in terms of floor area is bigger than that of France. However, permit data is not available in UK. The same is true to Russia, so completion is shown here instead. And one final note to the table is that permit generally refers to newly created spaces and rarely accounts information about renovation-like activity.