Flats for rent. “Rates have stopped”

As much as 86 percent owners of apartments for rent have only one such premises – according to the “Rental Yearbook” report prepared by Otodom and Polityka Insight. As its authors pointed out, the market in Poland is therefore highly dispersed, and over the last five years it has been shaped by, among others, the pandemic, war in Ukrainehigh inflation and record sales of apartments stimulated by the Safe Credit 2% program.

“The pandemic caused tenants to leave their rented apartments and return to their family homes, often outside the city. When everything slowly began to normalize in 2021, the outbreak of the war in Ukraine and the wave of refugees resulted in a 70% drop in the availability of apartments for rent in just a few weeks. The more affordable apartments were the first to disappear from the database, which led to the offer rate increasing by one third annually,” said Karolina Klimaszewska from Otodom, co-author of the report.

At the end of May, the Otodom website had 26,000 items on offer. apartments for rent. This is as many as a thousand fewer ads than a month earlier, but still a dozen or so percent more year-on-year. In 2023, users could choose from an average of 43,000. premises available for rent monthly. That's 35 percent. an increase compared to the average in 2022 (32,000), but by 13%. less than three years ago and 18 percent less than in 2020 – the report said.

“You could say that the increasing offer of apartments for rent has led to price stabilization. The offer of apartments for rent is systematically expanding, and the pace of increasing availability of premises may be caused by the return of refugees or migrations, or by the release of apartments previously rented by new real estate buyers, which is probably the result of the Safe 2% loan program,” the expert comments. Otodom.

According to Adam Czerniak from Polityka Insight, there are two main connections between the ownership housing market and the commercial rental market. “First of all, when apartment prices rise faster than rent rates, the number of tenants increases, which drives the increase in rental prices. Secondly, when more people buy investment apartments for rent, apartment prices increase and – with some delay – rental prices decrease because more offers on the market. Currently, the second factor is stronger. Apartment prices have stabilized, and properties purchased in previous years for investment purposes increase the supply (number – ed.) of apartments for rent rents have stopped, and the offer is larger than in the previous year,” noted Adam Czerniak, co-author of the report.

According to the authors of the report, the data for the last few years for the largest cities in Poland look interesting. For example, in Warsaw, over 13,000 were active in May. offers, i.e. by 7%. more than five years ago. Wrocław, Tricity and Poznań record increases of 20-50%. However, Łódź is the leader in the database of rental advertisements, because the city's offer has increased by as much as 121%. Kraków, however, still suffers from disruptions on the rental market. The local housing offer has still not returned to the pre-pandemic scale, even though the pace of its reconstruction is one of the fastest among provincial cities. At the end of May, there were 2,825 premises available for rent in Krakow. The reason for such a low supply is mainly due to the significantly reduced number of new apartments delivered.

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According to the “Rental Yearbook”, most apartments for rent are located in buildings built after 2010. In April this year the share of such premises jumped to 23%. all available offers. But apartments, although relatively new, are getting smaller. For example, in April 2019, the area was up to 30 sq m. accounted for only 8.5 percent. ads. Currently, it is as much as 12 percent, and larger areas (30-40 sq m) have now decreased by 5 percentage points. In turn, five years ago, premises over 60 sq m. it was 30 percent, and at the beginning of 2024 – 23 percent.

“There are still two-room apartments on offer, followed by studio apartments. However, the room sizes are smaller, which is due to the reduction in the area of ​​premises put into use by developers recently. Moreover, we are dealing with an oversupply of some apartments about a given size and number of rooms in relation to what tenants are looking for. For example, in 6% of inquiries, we have 18% of offers for studio apartments, and only 5% of searches for 4-room apartments .

The data presented in the report indicate that market and geopolitical phenomena had a huge impact on fluctuations in rental prices. The strong growth dynamics slowed down some time ago. In the period from April 2022 to February 2023, it remained at 25%. y/y. However, each subsequent month brought declines of up to 14%. y/y, and then 9%. y/y. An increasingly strong downward trend has been observed since July last year, and 2 percent annual price growth dynamics is the lowest result since 2021.

According to Karolina Klimaszewska investing in the purchase of a flat for rent will be less and less financially beneficialespecially for those who use mortgage loans.

“It is possible that this type of investment transactions will be listed on the market anyway, but some of these properties may simply remain empty because buyers will count on an increase in their value. However, if another government subsidy program is launched, which will lead to a sudden increase demand, the strong growth in real estate prices may continue, which will push young people into the rental market. This, with the limited inflow of new apartments, may again lead to supply shortages in the future. This is because each housing segment affects each other – the primary and secondary purchase and rental markets are strongly interconnected,” summarizes the expert.