For the second month in a row, the Flat Price Index, i.e. the price trend indicator on the Polish flat market, has been recording a decline. However, these are symbolic reductions and there is no certainty that it will be a noticeable falts prices drop in the future. Although developers are building less and suspending planned investments, they are still far from a situation in which they will have to encourage customers to buy.
In seven of the 10 largest Polish cities, the offer rates for flats on the secondary market dropped in June. And it would be good news for buyers, were it not for the fact that the reductions are small and concern less attractive flats on the outskirts of the cities.
Analysts: flats prices will start rising in 2025
PKO BP analysts believe that flats will start cheaper in the second half of the year and this will continue for a year and a half to two years. “We estimate that in the second half of the year the transaction prices of flats will begin to gradually decline. The projected decline in prices is mainly due to a significantly reduced demand due to an increase in interest rates and a tightening of lending policy as a result of the KNF’s recommendation for banks, ”the analyst said.
After that, flat prices will return to the levels of the first half of 2021 and will start rising again in 2025, analysts predict. The fall in prices is a result of decreasing sales, and this, in turn, is related to the stringent conditions for receiving a loan. Inflation, record real estate prices and the uncertainty of the future (the spectre of recession) make more and more people afraid to incur liabilities of several hundred thousand zlotys, so they wait for the development of events.
As a result, developers have suspended many planned investments, and flats are selling slower than two quarters ago. However, there is no collapse. Flats, although slower, are still selling, and they are mostly bought by cash customers. As for the drop in prices, it mainly concerns less attractive premises on the outskirts, because there are still people willing to buy the most interesting ones, who do not have to use a loan. Yes, what is happening on the market, explains Marcin Drogomirecki, real estate expert from Morizon.pl and Gratka.pl.
Still too much cash on the market for large cuts
– However, there is no drama on the real estate sale market; we are referring to the record-breaking year of 2021, i.e. the real time of the Eldorado in the entire industry.
Loans were the cheapest in history during this period and the market was full of cash. Firstly, because a lot of it was printed for the needs of anti-crisis shields, secondly, during the epidemic, savings increased, and thirdly – zero interest on deposits made people take money from banks and invest it in real estate – explains Marcin Drogomirecki.
– So the demand was huge and the supply was systematically decreasing. The owners of flats, as well as houses and plots of land, took their time with the sale, because they saw that the prices were constantly rising – he adds.
However, since the first reductions appeared, is it worth postponing the purchase decision in the hope that in a few or a dozen months they will be even greater? Drogomirecki believes that this is not the right move.
The correction may not come or be as big as some would like. Although loans are expensive now, once inflation is under control, interest rates should start to fall, and so does our monthly obligations.
– According to data from listed companies, sales to developers dropped significantly, compared to the previous year by as much as 50 percent. Despite this, I have not heard about any reductions – noted the expert Morizon.pl – I expect that, as during the previous bubble burst, developers will not officially come off the prices, but there will be offers such as “free storage room”, “turnkey kitchen finish free of charge”, “Discount on a parking space”. Opportunities will appear on the secondary market, it will be easier to find an affordable offer in an attractive, dream location, sellers will be more flexible – he added.