Buy now, because it won’t get any cheaper? Developers don’t believe that housing prices will rise

Who buys apartments for cash?  He asked the National Bank of Poland about it

“Even developers don’t believe in price increases anymore,” wrote Robert Chojnacki, CEO of Rednet24, on LinkedIn. He immediately added that there will be no price drops either – prices will remain stable.

The Developer Sentiment Index indicates, as its name suggests, the mood in the industry. A year ago at this time, just before the start of the government loan subsidy program, developers were expecting soaring sales and the possibility of raising prices. And they were right, because the “Safe 2% Credit” program, which lasted just six months, drove sales to levels unseen in the previous three years.

Developers predict a drop in demand for apartments

This time, they have no reason to be optimistic. “A year ago, 81.4 percent of developers expected an increase in housing prices and sales growth, now only 13 percent expect prices to increase. On the other hand, 80 percent expect prices to stabilize, and only 7 percent expect them to decrease,” according to the document published on Tuesday.

In addition, every third developer expects a drop in sales. A year ago, none of the surveyed companies had such concerns.

According to the CEO of Rednet24, the report, combined with sales and price data, allows for “almost perfect prediction of the market situation in the perspective of half a year”. So we are facing price stagnation, but noticeable drops are unlikely. Sales will also fall, regardless of the fact that the Ministry of Development has returned to the subject of a new subsidy program for housing loans.

In June, he decided to sum up the situation in an interesting way. Jarosław Szanajca, president of Dom Development, one of the largest developer companies in the country. In an interview with PAP Biznes, he admitted that “prices have rather stopped growing”, and with lower demand and sales volumes declared by companies, “there is no room to raise prices, but we expected that”.

May was the worst month for developers since January 2023

Evidence of falling demand is also provided by B data.IK: 16.4 thousand mortgage loans were launched in April – 11.4 percent less than a month earlier. Moreover, this was the third month of declines in the number of loans launched for the purchase of real estate.

In turn, Otodom Analytics reports that May was the worst month for developers since January 2023. Only 3.2 thousand apartments were sold on the primary market. This is 20 percent less than in the same period last year.

What is currently happening with apartment prices?

On the 15 housing markets monitored by the portal, the prices of new apartments changed only slightly on a monthly basis. The largest increases occurred in Rzeszów (+1.4%), Kraków (+1.4%), Łódź (1.3%) and Lublin (+1.0%), Toruń (+0.6%), Katowice (+0.5%), Kielce (+0.4%) and in the Poznań agglomeration (+0.8%). Declines were recorded in Warsaw (-0.7%) and in the Warsaw agglomeration (-1.4%).

The price drops in Warsaw and the Warsaw agglomeration result from the structure of new supply; cheaper projects in less prestigious locations were introduced to the market. The opposite situation was observed in Kraków, Łódź, Lublin, Toruń and the Poznań agglomeration, where the price increase results from the introduction of more expensive projects in more prestigious locations. Only in Rzeszów and Kielce did the price increase result partly from the increased sales of cheaper premises and from the actual increase in list prices.

A detailed analysis of price changes shows that, apart from Rzeszów and Kielce, where prices are indeed rising, developers generally did not make any significant changes to their price lists. The slight price increases and decreases were primarily the result of the changing structure of the offer, i.e. the sale of a larger number of cheaper or more expensive premises and the introduction of projects with different prices to the market.

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