Analysis of the development of construction - 2. quarter of 2005

According to reported data, the construction output in Q2 2005 remained at its Q1 2005 level.

The evaluation of the construction performance in Q2 2005 was still affected by the already fading-away influence of the change in VAT on construction work (which affected the reference basis in the months of March to June of the year 2004).

Model calculations carried by the CZSO indicate that the total construction output would be about 2% up on the previous year if these influences were neglected.

The key directions of the construction in Q2 2005 included:

- civil engineering works—especially the construction of highways where work is in progress on six sections longer than 100 km;
- business, logistics and administrative centres whose building is driven by the demand of foreign real estate funds (investment in real estate leads to above-average valuation);
- housing construction fuelled especially by very low mortgage interest and by development of lending by building societies.

Construction output

Development in the construction market segments in Q2 2005:

– new construction, reconstruction and modernization 2.7%
– repair and maintenance -18.1%

– building -2.2%
– civil engineering 2.6%.

Employment

Construction enterprises with 20+ employees employed 161.6 thousand persons in Q2 2005 (+4.3% on Q2 2004), of which manual workers accounted for106.5 thousand (+4.5%).

Wages

The average monthly nominal wage in enterprises with 20+ employees reached CZK 18 737 in Q2 2005 and was 4.3% up on the corresponding period of 2004; the hourly wage stood at CZK 167 (+4.5%). The average monthly wage of non-manual workers and manual workers was 6.5% and 2.7% up year-on-year, respectively.

Labour productivity

In Q2 2005, labour productivity in enterprises with 20+ employees was 4.2% down on Q2 2004 (constant prices). Labour productivity per hour decreased by 1.7% and unit wage costs increased by 8.9%.

Building permits

The planning and building control authorities granted 37 590 building permits in Q2 2005, which is 10.1% down on Q2 2004. The approximate value of the constructions permitted for implementation reached CZK 84.5 billion, which is by 8.0% more than in the corresponding period of 2004.

Housing construction

In Q2 2005, the planning and building control authorities permitted 9 870 new dwellings for construction—by 10.6% less than in the corresponding period of 2004. New construction will provide 7 663 dwellings (-10.2%), primarily in residential buildings (7 492), while 2 207 dwellings (-11.9%) will be obtained by renewals and enhancements. Of the total number of the newly permitted dwellings, 9 139 will be built in residential buildings (-1 242 dwellings).

The approximate value of the newly permitted dwellings reached CZK 19.8 billion (-3.0% year-on-year). The average acquisition value of a new dwelling in a new residential building thus amounts to 2.4 million, while a new dwelling obtained by renewal or enhancement in an existing residential building comes to CZK 1.1 million.

Territorially and in the long run, most dwellings are built in the surroundings of large cities, especially around Prague and in the Středočeský Region. In Q2 2005, construction of 3 589 dwellings was commenced in these localities. The smallest number of dwellings will be built in the Karlovarský Region (157). When related to the number of inhabitants, fewest dwellings will be built in the Moravskoslezský Region.