October 26, 2021

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The rental market catches the wind in its sails

The rental market catches the wind in its sails

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The last days of September are traditionally considered the end of a hot period in the rental market. This is also the case this year. August and September are usually a period of high traffic in the rental market. There are at least several reasons.

Traditionally, this is the period when many lease contracts expire, which favors the search for a new apartment. In addition, the holidays are a good time to change your place of residence. This also applies to people who change their place of work, for example, families, for whom holidays are a favorable time for a change of educational institutions. August and September are also an ideal time for students to find the new “Four Pillars” for the upcoming school year. The latter group is often discussed in the context of the boom that traditionally dominates the rental market in late summer and early fall.

This year is no different. This is favored by the fact that universities eventually return to the normal mode of education in favor of education quality, career development or student maturity. Among the largest universities, they all announced that most classes – especially the process (trainings and labs) will take place as usual. However, not all students will see their lecturers alive. The information we have collected shows that even today individual classes can be conducted remotely.

However, these are rare cases so far. Therefore, returning to university means for many people the need to rent a room or apartment. This translates to a decrease in the number of offers available. Data compiled by HRE Investments shows that the number of rental offers available today is 1/3 lower than last year. The movement is more pronounced in the room rental market. These are on display today more than half less than last year.

It should come as no surprise, then, that rental prices have risen in such circumstances. The average bid of major cities started in a slow upward movement already at the beginning of the year – according to estimates by HRE Investments based on data from otodom and bankier.pl. This indicates that the improvement in this market started with the dynamic recovery of the economy. The return of students to universities reinforced this trend. The effect is that from May to August, bid prices rose by about 5.5%. Unfortunately, we have to rely on the information from the ads at this point, because we will have to wait a few more months for the transaction data.

At the same time, since we’re talking about supply data, we have to stress that they’re bothered by the recent rise in housing maintenance costs. This fact confirms that landlords earn less than rent today, because not only have rental prices returned to their pre-pandemic level, but property maintenance costs have also gone up in the meantime. This was especially true for garbage collection rates, but although these changes were on a smaller scale, they also affected other elements of management fees. This means that even if the landlord retains pre-pandemic rental rates, after deducting costs, an amount of at least several tens, if not even several hundred zlotys, is now added to his account, less than twelve months or so.

The risk of restrictions continues to weigh on the situation in the rental market. The announcement shows that we will no longer face a strict shutdown of the economy, but it is uncertain whether restrictions will be imposed that will affect the rental market. This category includes the prohibition of short-term rentals, the closure of part of the service sector, or, for example, sacrificing the quality of teaching by switching to distance education.

Bartosz Turek, Oscar Skovsky
Human Rights Education Investment Analysis Team

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