The outstanding debt of construction finishing companies registered in the BIG InfoMonitor Debtor Register and the BIK database exceeded PLN 490 million in April this year, according to BIG InfoMonitor data. The unpaid debts of parquet, tile, paint or wallpaper manufacturers are also on the rise and amount to more than PLN 200 million.
In one year, there were more than 72 million unpaid debts of finishing contractors. Overdue debts of the industry reach 490 million zlotys. With more than 14,000 companies appearing in the Register, there is a backlog of PLN 34,300 per company, it was reported.
“Despite the 2% Safe Credit (BK) programme in operation in the second half of last year and another programme announced for this year to facilitate the purchase of real estate, especially from the primary market, the construction industry is struggling. The number of dwellings completed between January and April 2024 fell by nearly 15% year-on-year. The number of single-family houses under construction is also declining. In 2023 alone. 638 construction companies declared insolvency. The poor situation of the industry is undoubtedly the result of a reduction in both private and public investment. As recently as 2015, investment as a proportion of GDP was at around 20-21%, which is on the EU average, after which it fell to 15% In recent times, the construction industry has taken a strong battering. There has been a decline in demand for construction services, both from public and private investors, and this directly affects the situation on the construction materials market, according to BIG InfoMonitor.
BIG InfoMonitor noted that experts also point to the collapse in the construction of private houses – 30% fewer houses were built year-on-year in 2023, and data for Q1 2024 show that there is nothing to count on for a rapid improvement in the situation. The lower number of flats and houses completed means lower demand for construction services and finishing materials. An average Pole renovates a flat every five to six years, but high inflation and the general weak economy in recent years have caused two in five people to postpone renovations and one in three to reduce the scope of work. Both demand and prices are falling. On the other hand, unpaid non-credit and credit liabilities of manufacturers of most finishing materials visible in the BIG InfoMonitor Debtor Register and BIK database have increased, it was stated.
Almost PLN 49.8 million (against PLN 57.43 million a year earlier) of outstanding liabilities are also owed by manufacturers of wooden parquet flooring. Their indebtedness has been declining on an annual basis since 2022, but when looking at data from the last six months, an upward trend is evident. The share of over-indebted companies to the total sector is also growing. At the end of April, it stood at 7.6%, with the average over-indebted debtor owing less than PLN 691,000, it was reported.
The lowest indebtedness registered in the BIG InfoMonitor and BIK databases was recorded for paint and wallpaper manufacturers. Overly indebted are 74, or more than 8% of the operating, suspended and closed paint manufacturers who were reported as unreliable debtors. Their unpaid liabilities are slowly but regularly increasing and amount to PLN 6.21 million (PLN 6.05 million the year before). Wallpaper manufacturers are burdened with the smallest overdue debts, with 263 thousand PLN of liabilities per unreliable debtor (13 thousand PLN a year earlier).
BIG InfoMonitor also stressed that both producers of construction materials and finishing teams are facing not only a fall in demand for their services, but also an increase in costs. These sectors also rely heavily on employees earning the minimum wage, so they are being hit hard by yet another minimum wage increase. On the other hand, however, up to two-thirds of Poles are regularly planning some kind of renovation, and the drop in material prices may encourage a return to renovation plans, which will have a positive impact on the industry, it concluded.
Source: BIG InfoMonitor and ISBnews