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Real estate prices in Poland. Analysts indicate when a decline can be expected

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“In the two-year horizon of our forecast for 2024-2025, apartment prices will increase by 7 percent,” say Pekao bank analysts in their latest report. The peak of growth is the third quarter of this year. We are to see the reductions in less than a year, after March 2025. In their opinion, one of the key factors that may tip the scales will be the possible introduction of the Mieszkanie na start program.

“According to many measures, Poles can still afford apartments and are not leaving the market – so real estate prices will not stop growing,” point out analysts from Bank Polska Kasa Opieki (Pekao) in a report titled Real estate market in Poland 2024.

Apartment prices in Poland will increase

According to Pekao analysts, there are several arguments for the increase in prices on the real estate market. The first one is still too few apartments compared to needs. Moreover, in their opinion, available apartments are often too small and too many people live in them. “This is an argument for price increases,” analysts say.

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The second reason is that there is ample space for Poles to take out mortgage loans. “The potential for further acceleration of lending is significant, and we are still far from the historic double-digit dynamics of the volume of PLN mortgages. Real estate prices in Poland are not driven by a credit bubble,” they point out.

They add that currently in Poland only three out of ten apartments are purchased on credit. The rest are purchased for cash. This, according to analysts, limits the role of credit costs in shaping the market. They add that the most vulnerable consumers will most likely receive targeted assistance from the #NaStart program in the coming months and years. In addition, demand can be stimulated by former Swiss franc borrowerswho, thanks to court victories, gain the opportunity to return with the recovered capital to the market in order to meet the postponed demand.

The third factor that may influence further increases is the comparable increase in real estate prices with the increase in wages. “The income availability of real estate in Poland is at a high level compared to other European countries and has not decreased significantly in recent years. On the contrary, it has remained at a relatively constant level since 2015,” they point out.

Another argument in favor of increasing the price for purchasing your own home is the high probability of settlement of refugees from Poland currently staying in Poland. Ukraine, due to the ongoing war there, who currently mostly rent apartments. “We assume that the majority of the 400,000 immigrants from the East currently remaining in the country will settle in Poland permanently and look for their own place,” the bank's analysts point out. They add that increased demand may result in further price increases.

Moreover, they indicate that the modeling approach provides arguments for further increases in real estate prices. “According to our forecast, taking into account mainly macroeconomic factors, transaction prices of apartments on the primary market will continue to increase until the first quarter of 2025. From the second quarter, they should start to decrease slightly. In the 2-year horizon of our forecast (2024-2025), prices apartments will increase by 7 percent,” the Bank's analysts estimate.

Real estate market in Poland. Pekao report

Potential barriers to further growth

The main obstacle indicated by Pekao analysts are the high rates maintained by the Monetary Policy Council, which, in their opinion, will not fall in the coming quarters. “However, this is not the 'nail in the coffin' because, according to data from the National Bank of Poland, over 70 percent of apartment purchases are financed from own funds, not loans,” they add.

According to analysts, the #NaStart program will influence the shape of the real estate market. “The income availability of real estate in Poland is deteriorating, taking into account the high costs of credit. Without subsidies in the form of a 2 percent Safe Loan or #NaStart loan, the demand for real estate in Poland would be moderately low,” Pekao analysts forecast.

Moreover, the barrier to the growth of real estate prices that they indicate is demography. “Polish society is aging, and many cities and rural areas are being depopulated,” they point out. However, in their opinion, this is not a strong barrier to the growth of real estate prices, because large cities still attract new residents (also from abroad) and there is a housing deficit. “In addition, Poles are buying more and more recreational properties, which increases the demand for houses and apartments in smaller centers,” they add.

Polish real estate prices are growing the fastest in the entire European Union

The increase in real estate prices in Poland was among the fastest in the entire EU. – The years 2018-2023 brought a 59% increase in apartment prices on the Vistula River, which places us among countries such as The czech republic (63 percent), Estonia (69 percent), Lithuania (74%) or Hungary (85 percent) – calculate Pekao analysts. They add that high price increases on the real estate market are associated with higher prices inflation CPI – after adjustment for inflation in the prices of consumer goods and services, apartments in Poland became more expensive by 20%. during the same period.

They remind that during this time there were two periods of slowdown in the dynamics of housing prices. “The first one was caused by lockdowns during the pandemic (sanitary restrictions extending the formal process of purchasing apartments) and the second one was a consequence of strong interest rate increases in 2022, but in none of them did the average price dynamics of residential premises drop below +5% per year ” – they point.

They add that the second quarter of 2023 marked the moment when the average price of apartments in Europe began to shrink at a rate of almost 1%. on an annual basis. But not in Poland. “In the first quarter of 2023, the dynamics of real estate prices rebounded from the bottom and began to accelerate, while the increases in the second quarter of 2023 were partly due to the anticipation of the effects of the government program to support borrowers, Safe Credit 2 percent,” sum up Pekao analysts.

Apartment prices in Poland compared to the European Union

Author:as above, pkarp/ams

Main photo source: Shutterstock

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