Confused buyers, developers on hold. Much of this is the government’s fault

51.96 points – this is exactly the amount of the real estate market sentiment index (INPON) in the third quarter. This is 0.7 points less than in the second quarter and 3.6 points less than in the first quarter of this year. In the opinions of intermediaries, which are the basis of the barometer prepared by the Nieruchomości-online.pl advertising portal, the decision to postpone the “Kredyt na start” program was of key importance.

Customers are refraining from investing

– This time the decline in our index was not large, but the index is still decreasing. In Q3, some buyers and sellers were confused. While waiting for specific government decisions, they refrained from making transactions, which partially caused the stagnation. There are particularly difficult choices on the market today. This applies to both buyers and sellers, says Rafał Bieńkowski from Nieruchomosci-online.pl.

The real estate market mood barometer last achieved a lower result in 2022. Then, however, the market was overshadowed by the outbreak of the war in Ukraine, which caused the index to drop even to 46 points (below the optimism limit of 50 points). In 2023, the mood improved significantly, but for several quarters it has been declining again.

As emphasized by Bogusław Półtorak, prof. University of Economics in Wrocław, the basic problems of the real estate market are persistent inflation and expensive loans, which are a consequence of still one of the highest interest rates in Europe.

– While the European Central Bank, FED, and other central banks have rather dealt with the problem of inflation and entered the phase of reducing rates, in Poland we are repaying the inflation debt, which was caused by too expansive monetary policy in 2020-2021 and the price bubble caused by negative real interest rates. At that time, apart from purchases for own needs, investment purchases to protect against inflation dominated. Today, some of these properties are slowly returning to the sales market in an attempt to realize the inflation premium, hence the great reluctance on the part of sellers to make larger price reductions. But certain discounts on the secondary market are already becoming a fact if sales are to be real, he says.

NBP summarizes the situation on the real estate market. Prices are rising

The National Bank of Poland summarized the situation on the real estate market in the second quarter of 2024. At that time, 74.3 thousand construction permits were issued. apartments, which means an increase of approximately 7.6%. quarterly and 23.8 percent on an annual basis. Construction of 62.3 thousand square meters has started. apartments (more by approx. 3.7% q/q and an increase by approx. 32.5% y/y).

However, demand measured by the number of development contracts sold decreased. An interesting fact is that buyers financed more purchases with cash (this was the case with approximately 59 percent of transactions).

NBP notes that the nominal average transaction prices per square meter of apartments increased on primary markets, especially in Gdynia and Poznań. Similar trends occurred on secondary markets – quarterly nominal price dynamics were particularly high in Gdynia and Wrocław.

The level of average rental rates per square meter of apartments (excluding service and utility fees) increased during the quarter in Warsaw and slightly in 6 cities, while a slight decrease was recorded in 10 cities. The estimated cost of servicing a housing loan was higher in relation to the cost of renting an apartment due to the level of interest rates and rent rates.