0% Credit: The Project That Almost Nobody Wants Is Coming in a Few Days

— Next week, the Ministry of Development is to present a proposal again at the Economic Committee of the Council of Ministers — said Jan Szyszko, Deputy Minister of Funds and Regional Policy, on Monday on TVP Info, when asked about the date of presenting the new version of the “Startup Loan” project.

Regardless of when the project sees the light of day, we are in for a heated discussion on how to stimulate the real estate market and how the state should be present in it. Subsidies? Lower taxes? Cheap apartments for rent or a boost in municipal housing? The proposals are varied.

The following ministries have raised objections to the subsidy program: family, finance, funds, climate, justice, as well as the National Bank of Poland. Two of the four coalition formations, the Left and Poland 2050, are also opposed to the subsidies. Despite this, the Ministry of Development insists on the subsidies and argues that the program is based on different principles than last year’s “Safe 2% credit”, which caused a sharp increase in real estate prices. Although it ceased to apply almost 9 months ago, prices have not yet returned to their previous levels.

“Start-up loan” – assumptions

According to the initial proposal, the condition for obtaining subsidies under the project is to meet the income criterion, which is based on the first tax threshold, i.e. an annual income of PLN 120,000 gross.

In the program, this criterion is to be modified as the number of household members increases. However, exceeding the limits will not mean exclusion from the program – borrowers whose households exceed the limit will also be able to receive a new loan, but in their case the subsidy will be reduced. Childless people will receive a subsidy for installments with an interest rate of 1.5 percent. Families with one child – 1 percent, with two children 0.5 percent, and with three or more – 0 percent. The “Startup loan” is to be granted for a period of at least 15 years, with an interest rate at a fixed level set for a period of 60 months

The rules may have changed in the meantime, so we must reserve judgment and prediction of the impact on the market until the bill is submitted.

Sales have slowed down. The market is waiting for the government to make a move

There are no specifics, and that is enough to start destabilizing the market. Sellers and buyers are on the starting blocks, because the former do not know whether to put their offers on sale, and the latter – whether to buy or hold off for a few more months. Sellers are hoping for a repeat of the situation from the second half of last year, when apartments were selling like hotcakes, because the pool of money allocated for subsidies in a given calendar year was limited.

In 2024, sales slowed down. At the same time, more and more apartments are entering the market. In April and March, companies introduced significantly more apartments to their offer than they sold – in April, it was almost 6,000 apartments, 9% less than in March. As a result, at the end of April, there were 45.4 thousand apartments on offer in the seven largest cities, 6% more month-on-month and 13% more year-on-year – reported “Rzeczpospolita” a few weeks ago.

The newspaper also noted that the situation in individual cities is very diverse. In Krakow and Poznan, sales fell by more than 20 percent in April compared to March. In Warsaw, it fell by 3 percent, while in Wroclaw, an increase of 33 percent was recorded.

The lack of a support program combined with the persistently high prices of apartments and the increasing competition of offers (the number of advertisements has been systematically growing since the beginning of the year) has caused the demand for apartments to slow down. This is also confirmed by information coming from the credit market.

According to data from the Credit Information Bureau, in July 2024, 30.6 thousand potential borrowers applied for a housing loan, compared to 43.4 thousand a year earlier. As expected, the demand for loans fell after the end of accepting applications under BK2%.

– Despite concerns, interest in housing loans has not fallen to the level before the launch of the program and is currently about 1/3 lower than in July last year – informs BIK.

Subsidy programs do not help

We are not the first country to experiment with loan subsidy programs in the hope that this will make housing more affordable.

Loan subsidy programs lead to price increases, do not stimulate construction activity, and do not increase the percentage of families living in their own property – wrote “Puls Biznesu” a few weeks ago, citing the experience of countries that have decided to provide such support.

Subsidizing loans can take two forms: a subsidy to the down payment and a subsidy to the loan installment. In both cases, the economic effects are similar – they increase the demand for real estate – reports “PB”. It also cites examples from several countries where such solutions have been tested.