Construction production will further mitigate its decline this year, according to several residential analyst. According to them, the problem remains weak housing construction, which contributes to the price of new housing. In March, construction output in the Czech Republic slowed the year-on-year decline to 3.1 percent in real terms. In February, it decreased by 11 percent, which was the most significant year-on-year decline since July 2016.
Poor results are reported mainly by building construction, which fell by 5.7 percent year on year, pointed out BHS analyst Štěpán Křeček. On the contrary, the production of civil engineering increased by 6.5 percent year-on-year. This year, the weather is significantly worse than last year, which is hampered by outdoor work, he said. However, according to him, many companies have started the construction season since March.
The turnover is not visible in housing construction, where the number of newly built flats is still declining, added ČSOB analyst Petr Dufek. According to him, this is not good news for a tense real estate market, where apartment prices are creating new highs every other quarter. Real estate prices are growing significantly faster than rental prices, Křeček added. In this way, the motivation to rent is decreasing on the market, and according to him, many investors are beginning to focus only on purchases and subsequent sales of real estate at a profit.
The construction industry as a whole is still facing a shortage of suitable manpower, especially agency workers from Ukraine and the Balkans, said Trinity Bank analyst Lukáš Kovanda. They left last year in connection with the outbreak of a pandemic and are not returning yet.
“We believe that the Czech construction industry, which will be affected by the pandemic only to a certain extent, will not fall in any way this year, rather we expect stagnation or slight growth,” Peter Markovič, CEO of Xella CZ, with the Ytong brand of the largest aerated concrete producer in the Czech Republic.
According to him, the demand for building materials did not fundamentally decrease even during the pandemic. People want to build and renovate, they are also recording cheap and affordable loans. “In the currently published results, however, we continue to record a decline in the number of constructions started in the Czech Republic. This will sooner or later be reflected in the demand for building materials,” he noted.
According to Vejmělek, the recovery in the sector will be very slow and will continue to be driven more by public investment and the engineering segment. “Only in the second half of the year, in connection with the recovery of private investment, we expect more robust construction activity. The number and volume of building permits issued in March are a promise,” he added.
Source: CTK
