Real estate. The “nightmare” may repeat itself

During the conversation, Marek Wielgo stated that the problem of low housing availability in Poland is well illustrated by Eurostat data.

– They indicate what percentage of young people, aged 25 to 34, i.e. already graduated and already working, still live with their parents. In Poland it is nearly 53 percent, more than half of young Polish men and women – said the expert.

– Over the last ten years, this percentage has increased by 9 percentage points – he pointed out.

The expert pointed out that “low availability of housing is not only a Polish problem.” – It occurs in all developed countries in the world. Even recently European Parliament started a discussion on housing support programs. This is a problem that affects virtually every European country, he said.

Wielgo referred to the demand raised during the European debate to increase the pool of affordable housing, including social housing. – Easy to say – he said.

– I even talked about this recently with a local government official who said that this is a process that will take several dozen years before we reach the level as, for example, in Austria. Vienna is a flagship example of a city that can provide people with cheap rental apartments – said the TVN24 guest.

– At the moment, it seems that the only option is to support the purchase of your own apartments or houses. This can be done in different ways. I do not agree with the thesis that this support must automatically mean an increase in prices, he said.

He cited the example of the “Mieszkanie dla Młodych” program. – This program worked and there was no price increase at all. It was an increase of 1%, and there was even a year when the average dropped by 1%. – he emphasized.

The Apartment for the Young program operated in 2014-2018. It provided for funding own contribution the first apartment for people up to 35 years of age with limits on the price per square meter and the apartment area.

Marek Wielgo explained on TVN24 that there was no significant price increase because “under the influence of this program, developers began to introduce a lot of apartments to the market dedicated to credit customers.” – As a result, the average price per square meter of all apartments on offer did not increase at all – he added.

– Last year was a total nightmare. The government introduced a very generous program (2 percent loan – ed.), which has never happened before in history, in a situation of a supply crisis (fewer constructions – ed.). The offer of apartments decreased very quickly, especially the cheapest ones, which resulted in a sharp increase in the average price per square meter – said the expert.

– This year we have a completely different situation. We have a huge supply (number – ed.) of apartments, especially in the first quarter. If we look at the statistics of the Central Statistical Office, we will see that it was the best quarter in the history of the development market. Developers have never started building such a large number of apartments before, the expert emphasized.

– The problem is that postponing the decision on the new program causes developers to slow down the supply with each subsequent month or quarter – he noted.

– I am afraid that in a dozen or so months, when these loans on market conditions become available, we will again have a supply crisis and history will repeat itself – he said.

Marek Wielgo was asked whether real estate prices may fall in the next five years.

– The average price per square meter is a derivative of the entire basket of apartments on offer. In Warsaw and Krakow, this average has stabilized this year because developers, counting on this increase in demand from credit customers, started to introduce more apartments to the market in this segment, let's call it basic or popular, i.e. those with relatively the lowest prices – he spoke.

– There are districts in Warsaw such as Białołęka and Wawer. There, a large pool of apartments was delivered to the market, which stabilized the average price per square meter. However, I did an analysis and took the entire basket of apartments on offer and divided them into three segments. The basic one, i.e. a quarter of the cheapest apartments. One fourth of the most expensive ones, which I called the premium segment, and in the middle – this is the popular segment. This segment of the cheapest apartments has increased in price by 15% in Warsaw this year. from December to the end of September, while the premium apartment segment increased by 2%. at that time, and the one in the middle by 8 percent. – he said.

– My point is that apartment prices are rising because construction costs are rising. Wages in construction are rising and material prices are rising. They are growing slower than last year, of course, but they are still growing, so the price bar is constantly going up – he said.

– Young people who are hoping to buy their first apartment, the cheaper one, often in these locations on the outskirts of cities, are in the worst situation. Unfortunately, this increase in construction costs causes the fastest increase in apartment prices there – he said.

– These are the most expensive apartments, for example in Wola, which is a very popular district and developers are actually building a lot of apartments there, the average price dropped by 1%. However, the average price there is almost PLN 27,000 per square meter. Even if developers lower prices a bit, these will be the most expensive apartments, he predicted.

He admitted that he hoped that developers would introduce more affordable apartments to the market. – For example, in Warsaw it will be PLN 14-15 thousand per square meter, in Białołęka it is closer to PLN 14,000 per square meter. If more such apartments entered the market, e.g. thanks to programs such as this Startup loan, which the government still cannot decide on, there would be a chance to stabilize the average price per square meter and increase the offer of such apartments, which are more accessible – said Marek Wielgo.