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Apartments in Poland. Home prices may increase – forecast of PKO BP analysts

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Apartments may become more expensive. Within a year, we expect an increase in the average transaction prices of apartments by 5-10 percent, PKO Bank Polski analysts wrote in the latest report. As they pointed out, the increase in prices is to be driven, among others, by the demand generated by the government’s Safe Credit 2 percent program.

PKO BP analysts pointed out that in July the government program First Apartment will be launched, one of the elements of which is Safe Loan 2 percent. The solution provides for subsidies to the loan for the first apartment for 10 years, so that the interest rate on the liability throughout this period is 2%. plus the bank’s margin.

On June 19, 2023, the Polish Financial Supervision Authority amended Recommendation S regarding good practices in the management of mortgage-secured credit exposures. The amendment allows for a more liberal approach to assessing the bank’s creditworthiness, the loan from the Safe Credit 2 percent program will be more available, analysts indicated.

In their opinion, the new government program will be one of the reasons for the increase in housing prices. Analysts have pointed out that in 2023 there will be no restrictions on access to the program for eligible people.

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Housing prices 2023

“In the perspective of a year (2q23-1q24), we expect an increase in the average transaction prices of apartments (5-10%)”, reads the new analysis.

According to analysts, in addition to Safe Credit 2%, the reasons for the upward trend on the demand side are: slow recovery of credit demand postponed during the period of tightened prudential regulations; a decrease in the real value of housing and, consequently, an increase in their affordability by improving the ratio of income to housing prices; investment demand (experiencing high rates of return on real estate investments) and the gradual emergence of demand from migrants from Ukraine and the growing demand of foreign investors.

Analysts pointed out that on the supply side, the increase in prices is influenced by: the decreasing offer of apartments on the market in a situation of limiting the number of projects launched by developers from the first quarter of 2022, as well as the lack of available construction land in good locations in the largest cities.

On the other hand, the increase in housing prices is to be slowed down by: high interest rates, with the prospect of the first cuts in late 2023 at the earliest; probable return of the negative trend in the availability of housing – wage growth may be lower than housing prices; stabilization of rental rates, weakening the incentive to buy for rent; greater elasticity of supply than in the previous cycle.

PAP/Maciej Zielinski

Main photo source: Shutterstock

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