Developers are becoming more nervous, and apartments are no longer selling like hotcakes

May brought new news to Poland’s housing market, recording a third consecutive month of decline in new apartment sales. The number of units sold decreased by 10% compared to the previous month and by up to 20% compared to the same period of the previous year.

Although development supply has recovered, reaching 475 thousand apartments at the end of May, sales are still at a low level – 32 thousand apartments.

Warsaw, as Poland’s largest housing market, recorded a decline in sales of 6% month-on-month and 22% year-on-year, with 1,057 apartments sold. This is less than 1,000 apartments per month, a result that has not been recorded since the beginning of 2022 and 2023. The supply of new apartments in the capital has been increasing since last fall, but demand is still relatively low.

Likewise, in Tricity, 511 apartments were sold, most of them in Gdańsk (431). Wroclaw, Krakow and Poznań recorded 450, 378 and 365 apartments sold, respectively. Krakow in particular is having difficulty maintaining the pace of sales despite rebuilding its offer, as sales in May were the lowest since August 2022.

Oversupply in Łódź is a phenomenon we have been reporting on for a long time

Meanwhile, Łódź is one of those cities where the supply of new apartments constantly exceeds sales. We’ve been pointing this out for weeks. The number of available buildings has increased from 5,000 to 85,000, making it the second highest offer in Poland. This phenomenon may lead to an increase in supply if demand does not increase in the near future, which is unlikely to happen. We are monitoring the situation in this market with great enthusiasm, because for some time Łódź has become a mecca for flippers, renters and real estate influencers.

The main indicator of the state of the development market is the time of sale of the offer. In Warsaw, where the situation is more difficult, all available apartments will be sold in less than 10 months if sales remain at the average level of the last three months. However, in Łódź, at the current sales level, the stock of apartments will be enough for more than two years.

– A decrease in the number of reservations and a simultaneous increase in apartment prices

In May, 1,861 new bookings were recorded in seven major markets, the lowest result in almost a year and a half. Compared to April, the number of bookings decreased by 22%, and year-on-year by 27%. In Warsaw in particular, the number of new bookings decreased by 42% compared to the previous month, which significantly affected the overall result for seven markets.

Despite the decline in sales… Housing prices continue to rise. In May, in all seven cities included in the study, prices per square meter rose both on a monthly basis and on an annual basis. The dynamics of annual price growth ranged from 10% in Katowice to more than 20% in Krakow, Lodz and Warsaw. Marcin Crason from Otodom Analytics confirms that the rise in prices is not only due to the addition of more expensive apartments to the supply, but also to the disappearance of cheaper apartments.

This is probably a trend, and not just wishful thinking – the development market in Poland is going through a difficult period, with declining sales and an oversupply of apartments. However, the rise in prices shows that there is still demand for apartments, although it is more selective. In the long term, it will be necessary to monitor how the situation develops in local markets and whether the excess supply in cities like Lodz will be balanced by increased demand.