The housing market is trying to restore balance.  There are the first symptoms

Seller price expectations in the first quarter were higher than at the end of 2023 and broke records almost everywhere. The report from Expander and Rentier.io shows that the strongest increases occurred in the case of small apartments, which were approximately 6 percent higher. Higher than in the fourth quarter of 2023. In Warsaw, the expected average price for an apartment up to 35 square meters is approaching PLN 20,000. Polish złoty per square meter. On average, a studio apartment of 30 square meters costs PLN 585,000. Zloty.

It is no coincidence that analysts write about sellers' price forecasts, not prices – because offer prices are those at which apartments are offered, not those at which they are actually purchased (we do not see data on transaction prices continuously, because they appear with a significant delay). For this reason, not only facts play an important role, but also the psychology of the market and the beliefs of its participants.

The authors of the aforementioned report point out that sellers are very optimistic about the market. Although the “2% Safe Balance” program was no longer operational in the first quarter of 2024, prices in sales offers continued to rise. Interestingly, prices rose despite a significant decline in sales compared to the fourth quarter of 2023, and the possibility of a decline in interest rates.

In this context, it is also important what the supply side looks like, and there will be changes here. The first symptoms indicating that the market is trying to regain its balance have already appeared. According to the Central Statistics Office, in the period from January to March, developers started building nearly 42,000 apartments, up 79 percent from more than a year ago. Thanks to this, we will soon see many offers for new apartments under construction. But the situation currently is not good. The number of apartments used by developers reached 4%. Less than last year. Moreover, the vast majority of them have long been sold.

“A slight decline in offers is also visible from our analysis of the number of active sales offers, covering both primary and secondary markets. During the first quarter of 2024, in the 17 cities surveyed, we recorded 96,000 active ads (after removing duplicates). This is 1% less From last year, however, it is worth noting that we started 2024 with a “clean” offer, which grows dynamically from month to month,” the report’s authors emphasize.

What do the price forecasts look like based on the database analyzed by Expander and Rentier.io?

Warsaw stands out in the small apartment segment, where the average price has risen to PLN 19,504 per square meter. We are close to crossing the psychological threshold of 20,000. Polish złoty per square metre. However, when it comes to the percentage increase compared to Q4 2023, the capital is at 6.6%. Growth in the small buildings sector is slightly above average – according to data from Expander and Rentier.io. Quarterly prices for small apartments rose the most in Sosnowiec and Rzeszow. We also recorded double-digit increases in the case of medium-sized apartments in Sosnowiec and large apartments in Warsaw and Gdańsk.

“Such a rapid rate of growth in housing prices is unlikely to be sustained. First, because wages in the following quarters will not grow as quickly as in the previous quarters. Inflation is already much lower, so wage pressure should fall significantly. It is unlikely This year, there are also interest rate cuts. The only element that could theoretically lead to strong increases is the “Kredyt na Start” program. “Without it, prices will definitely stabilize, and in some cities, prices will probably fall a little and will continue to grow,” but slower. significantly higher than last year,” say the report’s authors.

Where do such expectations come from? The impact of the “Initial Loan” on apartment prices will be much less than the impact of the “2% Secured Loan”, among other things. Because this year there will not be as many people willing to participate in the new program as there were last year. Almost everyone who is creditworthy and wants to buy their first apartment has already done so with the help of “2% Safe Loan”. Very little time has passed since its completion for a new large group of such people to gather – say analysts from Expander and Rentier.io.

They also stress that if demand turns out to be surprisingly high, the software has a built-in safety feature in the form of a limit on the orders that can be placed. This year, the maximum number of applications will be 35,000, and from next year the maximum will be 15,000 per quarter. In the case of high interest, demand will be “distributed” over time. This way, there will not be a situation where tens of thousands of people are looking for an apartment at the same time.

As a reminder, when the PiS government provided the so-called 2% loan, in the first year of the program and at the same time in the election year there were no limits. As a result, instead of the 15,000 planned in the regulatory impact assessment. In the second half of 2023, more than 120,000 applications were submitted.

In the case of a “start-up loan”, the maximum amount this year may reach PLN 35,000. Loans granted, and in subsequent years PLN 15,000. My quarter.

Let us remind you that according to the current project, which is still under consultation, the basic condition for using the program is not to own an apartment now or in the past, with the exception of families with at least three children, but if they own an apartment if they want to receive subsidies, they must sell Their current apartment.

It will not be clear whether these conditions will be maintained or changed until the bill passes through Parliament. As we wrote in Interia, at the moment, we do not know the final draft that will be submitted to the House of Representatives, because public consultations are ongoing, and The project is controversial and raises concerns, among other things, because the income limits are very high (for example net PLN 23,000 for a family of 5 people), which means that subsidies will also go to those who can get a loan. The Polish Banking Association even reported such comments.

However, even critics of the program point out that the feature that sets it apart from its predecessor is the introduction of application caps from the beginning.

The limit is 15,000 applications per quarter, with a maximum of 35,000 this year, meaning that the impact of the new program on demand will be immeasurably less than the impact of the 2% loan. In the first period, it is likely that many people will apply for subsidies from the program, but after the maximum limit is exhausted, there will be a “cold shower”, because it will turn out that the demand for loans and apartments will be slightly higher than in normal, unsubsidized periods. With subsidies, and immeasurably less than during the “2% loan”. At the same time, the number of sales offers is increasing, which means that fewer orders will match the increasing number of sales offers. As a result, there should not be an imbalance in the market as was the case with the program of the previous government – comments Jan Dzikonski, housing market analyst and founder of the FLTR portal.

The effect is also limited to the support structure itself. Some groups, even if they participate, will benefit only to a small extent.

Other elements aimed at reducing the impact of the program on apartment prices are the limits on the loan amount covered by support and income. The tables below show the levels of these limits. It is worth noting that slightly exceeding the income limit does not lead to exclusion from the program, but rather to a reduction in support. However, if the overrun is large, the surcharge drops to zero. Conversely, if the loan amount is exceeded, full interest will be charged on the excess. For example, if a couple without children wants to buy an apartment in Warsaw for PLN 700,000. Polish zloty, it's only 480 thousand. PLN will bear an interest rate of 1.5%, and the remaining PLN 220,000. PLN will have the same interest rate as a regular mortgage loan, i.e. around 7.5%. – explains the expanding analyst.

Monika Krzyniak-Sajewicz

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