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Transaction prices of apartments in 2023. PKO BP analysts expect stabilization

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PKO BP analysts took a closer look at the situation on the housing market in Poland. In the latest report, they forecast that the average transaction prices of apartments will remain stable in the perspective of this year, although in the first half of 2023 “they should be lower than in the same period last year”.

“In a year’s perspective (Q1 – Q4 2023), we expect housing prices to stabilize, although in the first half of 2023 prices will be lower than in the first half of 2022. The negative pressure on the price level will weaken in the second half of 2023, when the market will be more and more affected by limited supply (as a result of the negative dynamics of projects launched from the first quarter of 2022), and at the same time demand will slowly start to recover.

Housing prices 2023

As assessed in the analysis, the reasons for the downward price trend are: collapse of credit demand for housing due to high prices interest rates and restrictive prudential regulations; real decrease in the income of the population; oversupply of apartments in the context of a large number of projects launched during the boom period and finalized already in the first half of 2023. Such premises may also be a slower increase in construction costs and an increase in expected rates of return by investment buyers.

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In turn, the decline in housing prices will be hampered by: developers’ experience and their project and sales management skills; high rental rates with short-term limited supply of apartments for rent; increasing the affordability of housing by improving the ratio of income to housing prices; slow recovery of lending (gradual improvement in creditworthiness due to the easing of the interest rate risk buffer with periodically fixed interest rates and salary increases, slight decrease in WIBOR); introducing apartments from the period of already high construction costs to the offer; gradual revealing of the demand of refugees from Ukraine.

“In the rental market, the increase in rental rates in the fourth quarter of 2022 slowed down in most cities, and even a slight correction is visible in the first months of 2023. The demand for housing needs of war refugees from Ukraine has probably stabilized, some of them have returned to Ukraine. It has also probably decreased. pressure on the rental market from people who have not been creditworthy recently – now, thanks to the easing of the requirements for assessing creditworthiness with a fixed interest rate from February 2023 and the announcement of the Safe Credit 2% program with a periodic subsidy to repay a housing loan, they will return to transaction market The fall in the yield on long-term bonds reduced investors’ expectations as to the rates of return expected from renting, the report reads.

Main photo source: Photocon / Shutterstock

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