The demand for flats in Poland, both on the primary and secondary market, has decreased by about a half compared to last year, experts say in the housing market. They indicate as the main reason the increase in interest rates, which drastically limited access to financing for potential buyers.
Way less demand for flats in Poland
According to the data provided by 15 housing developers listed on the Warsaw Stock Exchange, their sales decreased by 41% in Q2 yy. Compared to the first quarter of this year. companies sold by 16 percent fewer apartments.
MarketPierwotny.pl expert, Jarosław Jędrzyński pointed out that the developers listed on the Warsaw Stock Exchange are the industry elite, achieving the best results among domestic development companies. – As far as the entire market is concerned, the demand for new premises has decreased even more, it is now lower on average by half, counting year on year – the expert assessed.
Primary market close to depression
– Due to the increase in NBP interest rates, the primary housing market quickly moved from a state of prosperity to a stage close to depression in the business cycle – he added. He noted that after the collapse of the housing loan market, the segment of new apartments was saved from an even greater collapse in cash transactions – their share in the sales of developers reached 60-70%. According to Jędrzyński, however, it is difficult to assess whether investment cash clients will soon find more attractive forms of investing their capital.
According to preliminary data from the Central Statistical Office of Poland, from the beginning of the year to the end of May this year. developers started the construction of 55.9 thousand sq m. flats, by 23.2 percent less than a year ago. During this period, developers received 91.600 building permits or submitted a construction notification, by 0.4 percent. more yy.
Jędrzyński commented that there are no symptoms of a downturn in the CSO data so far. – It is true that the volumes of apartments started or building permits are no longer record-breaking, but they are still at a relatively satisfactory level. This may, however, result from the entry into force of the provisions of the amendment to the developer act at the beginning of July this year.
In the second quarter, developers tried to launch as many investments as possible before the July 1 date , so that they would be free from the rigours of the new regulations – emphasised the expert. He added that the CSO data for the second half of the year will be more reliable, as in his opinion they will show a clear slump.
– Prospects for the primary housing market are currently the worst in at least 12-13 years. Galloping inflation, followed by the price of domestic money, is putting more and more pressure on the demand for new flats on the part of credit customers. On the other hand, a possible decline in the interest of cash buyers is currently a very serious risk for developers, said Jędrzyński.
He pointed out that the average rents per square metre development units have recently stopped, signalling a weakening of the growth potential.
The secondary market has also suffered
There is also a clear decline in demand on the secondary market. According to Marcin Jańczuk from Metrohouse, about half of potential apartment buyers withheld their purchase decisions compared to the same period last year.
– The barrier is not the high prices of real estate, because we have been dealing with such properties for a long time, but the lack of access to financing as a result of high interest rates, which effectively forced people interested in buying them out of the market. There is still a fairly large group of cash customers on the market, who often make a decision quite quickly if a good-price offer is available on the market, admitted the expert.
Asked whether the owners are less willing to put up their flats for sale at the moment, Jańczuk said that so far there are no major problems with the influx of new sales offers, although – as he admitted – the supply may also decline. The expert said that currently sellers are making transactions with the intention of buying another property, most often for their own purposes. However, there is no rash of offers that were purchased as an investment or for rent.
The latest estimates of Metrohouse show that in Q2 the rise in home prices in the secondary market continued, though not everywhere. In a few large cities these were increased by a few percent (Warsaw, Kraków, Gdańsk), while in Łódź, Poznań and Wrocław, for example, the prices were very similar to those from the beginning of the year. I think that only the data for Q3 this year. will show the direction of market development. Transactions from Q2 are still the aftermath of credit purchases, which are so hard to find now – said Jańczuk.
He said, so far the surge in prices on the rental market is behind us. The upcoming academic year will be the test, which may additionally heat up the situation on the market. – First of all, there is a lack of offers from the lower price range – such offers quickly disappear from the databases of intermediaries and portals.
An additional demand for housing is recorded by people who, due to the current situation on the loan market, must look for other forms of meeting the demand for housing. Refugees from Ukraine are still a very important group, although there is a certain change in their preferences – while originally only the largest Polish cities were taken into account, today it can be seen that apartments outside the largest metropolises are more and more willing to rent – the expert noted.