Renting an apartment is getting more and more expensive – analysts from Expander and Rentier.io point out in their latest report. Although the annual increase in the cost of rent usually does not exceed PLN 100, in some large cities the increase is several times higher. For a large apartment in Gdynia, you have to pay up to PLN 313 more. Over the last five years, rent costs have usually increased by 30-50 percent. This increase is very strong, especially from the point of view of students.
“The cost of renting an apartment is still slowly rising. According to the report by Expander and Rentier.io, from January to July, declines were prevalent only in February and May. In the remaining months, there was a predominance of small increases,” we read in the report.
However, experts point out that for students who are starting to look for accommodation for the next academic year, the changes compared to the previous year are important.
The increase is usually about one hundred zlotys
“Here, increases also dominate, but the increase in rental costs usually does not exceed PLN 100. The exceptions are large apartments in Gdynia (+ PLN 313), Częstochowa (+ PLN 233) and Rzeszów (+ PLN 125), medium-sized apartments in Rzeszów (+ PLN 206) and small ones in Rzeszów (+ PLN 145) and Białystok (+ PLN 111),” we read.
“In turn, over the last 5 years, rental costs have usually increased by 30-50 percent. This increase is very strong, especially from the point of view of students. It should be added, however, that it is lower than the increase in the average salary (+62 percent) or the minimum salary (+100 percent). Despite this, in the basic scenario we expect a continuation of relative stabilization, i.e. small increases in rental rates interspersed with months of declines. This could only be changed by a large wave of immigrants from Ukraine,” experts say.
Experts point out the changes that have taken place since last year in academic cities (10 cities with the largest number of students – Gdańsk, Katowice, Kraków, Lublin, Łódź, Poznań, Rzeszów, Toruń, Warsaw and Wrocław). “The worst news is for people studying in Rzeszów and Toruń. In their case, average rental rates in July were 9.8% and 7.5% higher than a year ago, respectively. Unfortunately, there was no city where rental rates fell below the level from a year ago. The smallest increases were recorded in Gdańsk (1.5%), Lublin (1.7%) and Wrocław (1.8%),” the experts enumerate.
“We must mention the situation in Warsaw, where the largest number of students (approx. 250,000) is by far the most. Here, the average rental rate is the highest and amounts to PLN 77 per m². The percentage increase compared to the previous year is relatively small, at 2.8%. The next key academic cities are Kraków, Poznań and Wrocław, where the number of students exceeds 100,000. In their case, the rates increased by 5.6%, 4.6% and the aforementioned 1.8%, respectively,” we read.
“When it comes to all the cities we analyzed, the rates in all of them were higher than a year ago, and the average change was 4.6%. July itself was another month this year with a predominance of increases (increase – 9 cities, decrease – 6 cities, no change – 2 cities). This year so far we have only had two months with a predominance of decreases – February and May. However, the changes are usually small,” experts say.
What are the prices in specific cities?
The experts also looked at the data for the second quarter of 2024. “Although they are less up-to-date, a large amount of data allows us to see what the rental costs are in individual market segments and how they have changed. We checked the rental costs for apartments with an area of 30 m², 50 m² and 70 m². In terms of value, the biggest price increases were for large apartments in Gdynia (+ PLN 313) and Częstochowa (+ PLN 233). The next places are occupied by all types of premises in Rzeszów – medium-sized (+ PLN 206), small (+ PLN 145) and large (+ PLN 125),” we read.
“In contrast to the data for July alone, the comparison for Q2 shows some declines, but in most cases they do not exceed PLN 50. The largest decreases were seen in rental costs for large apartments in Bydgoszcz (-PLN 92), small apartments in Toruń (-PLN 90) and Łódź (-PLN 64), and large apartments in Białystok (-PLN 60),” they list.
In recent years, there have been large increases
The experts also took into account the price increase in the longer term. “The last five years have been primarily a period of very strong rate increases in Q2 2022, i.e. after the start of Russia's invasion of Ukraine. In addition, we have a predominance of small increases. It is worth adding, however, that even a small increase calculated from a high level causes significant changes in relation to the earlier, lower levels,” we read.
“Therefore, when we look at how rental rates changed between Q2 2024 and Q2 2019, increases of 30%-40% predominate. There are also quite a few increases of 40%-50%. An increase of over 50% occurred only in the case of large apartments in Sosnowiec (54%). In turn, an increase of less than 10% occurs only in the case of small premises in Częstochowa. There are also very few increases in the range of 10%-20%. This applies only to medium-sized apartments in Częstochowa (11%), large ones in Bydgoszcz (15%) and small ones in Toruń (19%),” the experts say.
Rental profitability
Analysts also paid attention to profitability renting an apartment.
“The recent stagnation in the apartment sales market and the increases in rental rates have slightly improved the profitability of new investments in rental apartments. In May this year, the profitability was the lowest this year and amounted to 4.66 percent net,” we read.
“In July, it was already 4.77% net. These levels are equivalent to the interest rate on a bank deposit with rates of 5.75% and 5.89%. However, the profitability is still much lower than a year ago, when it was 5.3% net, or the equivalent of a deposit of 6.5%. This decline is of course due to the strong increase in apartment prices, coupled with a slight increase in rental income,” they point out.
The experts noted that the values refer to purchases without a loan and assuming that a 50 m² apartment is rented for the full 12 months of the year. “We have included costs such as the agent's commission (3%), PCC (2%) assuming that we buy from the secondary market, notary fees and extracts, refreshing after purchase, furniture, cyclical expenditure on refreshing and minor repairs, property insurance and flat-rate tax (8.5%),” we read.
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