According to the calculations cited by Credit Agricole, the average annual price growth rate last year was 11.1 percent. This year it is expected to amount to 9.8 percent.
In turn, in 2023, the bank’s analysts forecast a slowdown in the growth of housing prices to 7.8%. (on an annual basis). In the years 2024-2025, the dynamics of price growth will stabilise at the level of 8.3%. – results from the forecast.
Average apartment prices per square metre
The bank’s forecast means that the average transaction price in the seven Polish cities included in the report will increase from PLN 9.6 thousand. PLN in 2021 to 10.500 PLN per square metre in 2022. In 2023, it is expected to amount to 11.300 zloty. Then it will increase by another thousand zlotys in the years 2024-2025.
Compared to the previous forecast, the path of home price growth has been revised upwards by approx. 1.2 percentage points. percent in the years 2022-2023. This is the effect of a significantly higher starting point for the forecast and taking into account the supply side, i.e. the cost of building a flat, in the model specification.
What will be a brake on the increases in prices?
Credit Agricole forecasts that the rate of growth in home prices may slow down due to lower demand from cash buyers, who currently constitute a large part of buyers. In addition, there is a slowdown in lending due to the recommendation of the Polish Financial Supervision Authority and the likely reduction of relatively high margins by developers in order to stimulate sales, as well as the sale of cheaper apartments.
However, forecasting in the current market conditions is burdened with high risk.
“The factors of uncertainty for our forecast are the strength of the impact of higher interest rates on the demand for apartments and their prices, with the probable simultaneous limitation of the supply of apartments by developers” the report states.
According to the authors of the report, the scale of the impact of the war in Ukraine on the situation in the housing market is also difficult to precisely estimate.
“The outflow of Ukrainians hitherto employed in Poland (often in the construction industry) will contribute to an increase in housing construction prices, and at the same time the inflow of new refugees will increase the demand for housing”, they indicate.
As for other indices important for prices on the real estate market, for the purposes of the forecast it was assumed that in the forecast horizon (i.e. until 2025) the unemployment rate in Poland will be around 3%. Such a tendency will result, inter alia, from the expected acceleration of economic growth associated with obtaining EU funds, including the launch of KPO.
“Our forecast assumes that the growth rate of the prices of building materials will accelerate in the second quarter of 2022 to approx. 40%. year on year (compared to 28.3% in Q1). In the second half of 2022, the prices of materials will grow more and more slowly due to the expected end of the war in Ukraine and the easing of supply barriers” the bank’s weekly report entitled “Macromap”.
The bank’s economists also assume that in 2023 the annual dynamics of commodity prices will stabilise close to zero. This is due to the high base effects of 2022 and the weakening demand for home purchases related to the high level of interest rates.
“In the years 2024-2025, we will return to the long-term trend of a slight increase in material prices (by approx. 2% annually)”, they add.