Huge increase in housing loans granted despite record high prices per square meter. As economists point out, the real estate market was revived by the government program “Safe 2 percent credit”. More than half of the loans in November were disbursed thanks to this program. On an annual basis, the value of housing loans increased by nearly 340 percent. What awaits us in 2024?
The real estate market is red hot. In November alone, banks granted over 23,000 housing loans. This is an increase of over 250 percent year on year. – The number of loan applications for mortgage loans increased significantly in the second half of 2023, twice as much as in the first half of the year. This has definitely revived the mortgage loan market – says prof. Marcin Kalinowski, economist from WSB Merito University in Gdańsk.
Nearly 60 percent of housing loans in November were granted under the “Safe Two Percent Credit” program. – On the one hand, a low-interest loan, and on the other hand, a subsidy that improved creditworthiness. There are many threats, so I think this is a temporary, sudden reaction, but the problem will be in 10 years when the installments will be repaid on the market, at market prices – explains Dr. Edyta Wojtyła, an economist from WSB Merito University in Poznań.
Subsidies to loan installments from the state budget encouraged many Poles. – Of course, it was not 2 percent at the end, because – after taking into account all other fees – the annual, real interest rate was about 4 percent, but it was still half as much as normal on the market, so it was very attractive – notes Prof. . Ph.D. Dariusz Zarzecki, economist from the University of Szczecin. – It was a huge opportunity to purchase real estate for people who had not been able to afford it before, as the ability to purchase it was definitely underestimated – emphasizes Iga Kryzińska from Homfi Real Estate Agency.
Data from the Credit Information Bureau show that from January to November, banks and credit unions granted a total of over 145,000 housing loans with a total value of over PLN 55 billion. On an annual basis, the value of housing loans granted increased by nearly 340 percent, to over PLN 9.5 billion.
– People took a breather when it turned out that inflation was no longer rising, which means that prices were rising, but they were not growing faster and faster, at the same pace as they were growing in February this year. People decided to spend the funds they obtained from the loan. Looking at the 2 percent loan and the conditions we have, we must remember that these conditions are relatively good in relation to interest rates and the WIBOR rate – points out Kalinowski.
What’s next for the program?
A side effect of the “Safe 2 percent loan” program was a record increase in real estate prices. – It started happening within the first month, when the owners noticed that they could get more from selling their property. People who weren’t even sure about selling their property said they would try, says Kryzińska.
During the year, the prices of apartments in the developer’s standard increased the most in Kraków, by as much as 26 percent, in the Tricity by 24 percent, and in Warsaw by 18 percent. In turn, Wrocław or the Katowice agglomeration will see an increase of 13 percent.
– The increase in demand and insufficient supply causes an increase in prices, so prices have increased quite significantly this year. Next year we also expect prices to increase by approximately 6 percent, and the following year by approximately 7 percent, so there will still be increases in apartment prices in Poland, Zarzecki informs.
Last year in Krakow we could buy a 40-square-meter apartment in developer standard for PLN 500,000, today for the same amount we can buy an average of 32 square meters. – Everyone should be able to afford their own apartment, and in our country only those whose average salary (salary – editor’s note) exceeds PLN 7,000 can afford their own apartment, and such people constitute at most 50 percent of working people out of 17 million working people, and due to This means that half of people cannot afford it, says Prof. Marian Noga, economist, former member of the Monetary Policy Council.
According to real estate market experts, the decision to continue the government program “Safe 2 percent credit” will be the main factor in price development next year. – This program may activate lending, banks are happy, but will society be happy that it will continue to pay extra? – Wojtyła asks.
The government must answer the question whether we can afford to maintain this program. – A 2 percent loan is not really a loan that only costs 2 percent. This is a loan that costs as much as a loan on the market and the rest must be paid by the state from public money, from our money – emphasizes Wojtyła.
Currently, the average value of a housing loan is over PLN 400,000 – almost 25 percent more than a year ago. – If the program is extended in its current form, we can expect demand for loans to continue and housing prices to continue to increase in 2024. If we do not maintain it, we can expect a drop in prices, but this may also threaten the economy – explains Kalinowski.
The January decision of the Monetary Policy Council regarding the level of interest rates and the new housing proposals of Donald Tusk’s government are also questionable.
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