The real estate development industry has recorded a large drop in apartment sales. Due to the downturn, many people expect real estate prices to fall. In an interview with Business Insider at the XXXI Economic Forum in Karpacz, Dariusz Blocher, director of the Ferrovial Group for Europe and a member of the supervisory board of Budimex admitted that the pace of pre-sale of apartments is currently three times lower, but this does not mean good news for potential apartment buyers.
Apartment prices in Poland will go up
– This is the scale of the problem. This is because there are too many elements of vague and unstable risks. Therefore, everyone holds back when it comes to price. I believe that the price will only increase – emphasis Blocher.
He added that it is possible that there will be opportunities on the market if developers decide to sacrifice the margin. As he explained, the sector’s profitability is around 12-15 percent, of which the developer could possibly spend 5-6 percent.
– Where developers will panically need to regain liquidity, they will probably discount even more, so there will be projects on the market where it will be possible to buy cheaper. But in a normal functioning market, prices will rise because everything will become more expensive. Even if the prices of energy and gas stabilise, they will certainly be at a higher level than before the war – he explained.
The problem for the industry is that there is less interest in mortgage loans, through which many households have financed the purchase of a flat. The number of loans granted in July dropped by almost 63% year on year, which is the worst result in over a decade.
– The problem of interest rates has also appeared in Europe, so it is not only a problem for Poland. Flats in Poland are expensive, but still, according to a Deloitte report, in order to buy a 70-square metre flat in Poland, you have to work 8 years. In many countries, especially those coming from the communist era, such as the Czech Republic, Slovakia or Serbia, you have to work 12 years. The situation is not bad yet – he assessed.
Speaking about the situation on the housing market, Blocher pointed out that the availability of premises is currently low, but the situation is improving. Poland puts the highest number of flats into use per 1,000 inhabitants in Europe, but in terms of the total number of flats, it is ahead of most of the EU countries.
400 apartments per 1,000 inhabitants
“There are 400 apartments per 1,000 inhabitants, with the average being around 450,” he said. As he added, about 800,000 are currently needed. apartments.
Dariusz Blocher expects a slowdown which should last for about 18 months. During this time, the number of new investments is expected to drop by several dozen percent. There will be fewer flats and they will sell worse.
Almost 7,000 PLN per sqm
As he pointed out, developers are already accelerating the process of handing over flats in order to avoid falling prices and rising costs. Most private investors are limiting their investments due to the uncertainty caused by the war in Ukraine, and rising interest rates and increasingly restrictive bank policies have eliminated almost 40 percent of the money from the market. potential buyers of apartments. This is overlapped with the costs of plots, construction and finishing, which Blocher estimates at almost 7,000 PLN per sqm.
– All this means that the supply of flats will drop for a while, because developers will not be able to produce it at a reasonable price, and residents will not be able to buy it. But all this will stabilise and I think that in a year and a half we will start to grow again, because we really need these apartments – he said.
Problems can be solved by means of more consumer-friendly instruments that will lower the prices of housing and construction. One is a fixed interest rate loan and another is to link the loan obligation to a property rather than a person, similar to how it works in the United States.