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Wednesday, May 29, 2024

Housing prices. Stabilization due to interest rate increases

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Apartment prices should not increase in the near future – said Marcin Klucznik, an expert of the Polish Economic Institute. He added that the program of subsidizing loans for the first apartment, prepared by the government, will enable less affluent people to buy a flat.

The economist pointed as one of the main reasons for the slowdown in housing prices interest rate increases by the National Bank of Poland (NBP), which were supposed to strangle inflation. He noted that the number of new loans fell by up to 75 percent. on an annual basis, and their total amount is the lowest in 4-5 years. He also noted that the number of currently started constructions is also much lower. “First of all, companies are continuing what they started in previous years,” he said. In his opinion, the decline in demand will cause a slight slowdown in housing prices in the first quarters, but – as he pointed out – the scale of possible reductions depends on the city in which it is located. “It is certainly to be expected that prices will not rise,” he stressed.

Safe Loan 2 percent Will it affect housing prices?

The key keeper asked by PAP about the potential impact of the government project “Safe Credit 2 percent.” on housing prices said that at the moment it is difficult to determine it because we do not know all its details, although it does not expect an increase in prices.

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– We would rather expect a redistributive impact (…) that less affluent people who had a problem with own contribution or by taking out a loan, they will be able to buy a flat – said the economist.

Prices will be high because of the housing gap

He also said that the scale of social and municipal construction in Poland is relatively low compared to other countries, and that we have a gap estimated at about 1.5-2 million apartments. He explained that this is the result of many years of neglect dating back to the times of the People’s Republic of Poland. According to the expert, until the housing gap in Poland is filled, sales and rental prices will be high. At the same time – as he noted – “this is a task for decades”. He added that the role of the government and financial supervision is not so much to increase the housing stock of the country, but rather to ensure the safety of borrowers. He also noted that fixed interest rates are an effective defense against high volatility of loan installments.

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