Credit subsidies. This time, developers are reportedly not opening the champagne

The “Start Credit” loan subsidy program has returned quite unexpectedly. In the last dozen or so weeks, one could get the impression that the government decided to withdraw, in English, from a proposal that real estate experts considered erroneous and leading to an increase in housing prices. Already in the spring, the then Minister of Development Krzysztof Hetman indicated that work was underway in the ministry on the continuation of the “Safe 2% Credit,” but silence fell over the project. Until, as it turns out, a while later.

The government is digging up the “Start-up loan”

The draft of the government program “Kredyt na start” is to be submitted to parliament immediately after the summer holidays, Deputy Minister of Development and Technology Jacek Tomczak announced in the Senate on Wednesday. He added that the ministry wants the act to be passed this year and the program to enter into force on January 15, 2025.

– Many Poles are waiting for this solution. We assume that the bill will most likely appear in parliament right after the holidays. We would like the act to be adopted this year. We plan for these provisions to enter into force on January 15 – said Jacek Tomczak, answering questions from senators.

Start-up loan and developers’ plans

The Rynek Pierwotny portal asked representatives of the largest development companies in Poland how the proposed subsidies could affect the real estate market.

Tomasz Kaleta, Managing Director of Sales and Marketing at Develia, believes that due to the postponement of the start date of the “Kredyt na start” program to 2025, we can expect the housing market to stabilize in the coming months.

– In recent years, the market has been characterized by large fluctuations, initially caused by the pandemic, then the war, the introduction of the “Safe Credit 2%” program, and most recently the confusion surrounding its successor, “Start Credit,” the launch of which has already been postponed several times and the assumptions changed. There was even talk of abandoning this idea. Taking this context into account, we do not develop our offer based on announced government programs. Moreover, it takes an average of 2-3 years to prepare a project before it goes on sale, so it is difficult to plan investments for a specific program – he said.

Good sales despite the lack of subsidies

Zbigniew Juroszek, President of the Management Board of ATAL, pointed out that since the beginning of this year, i.e. in the period without the buyer support program, his company has been recording stable results.

– This confirms our position that the government program in its currently proposed form will not be a decisive factor for contracting in our case. What would definitely affect the demand and supply situation is a reduction in interest rates, and as a result, a reduction in the cost of mortgage loans (customers) and investment loans (developers), he said.

Dawid Wrona from Archicom noted that the program’s launch date had never been officially announced before.

– We have not made any binding decisions so far due to the lack of specific information, but after confirming the start at the beginning of 2025, we will certainly take into account activities addressed to the beneficiaries of the program.

Andrzej Gutowski, Vice President of Ronson Development, noted that it is not known whether the announced assumptions of the program will remain in the same form. In his opinion, the lack of a credit support program for customers in the second half of the year may result in a moderate slowdown in apartment sales in the coming months.

– Developers may also hold off on launching new investments, waiting for specific program assumptions – he said. Like other interviewees, he announced that the proposed changes do not affect the plans of the company he represents.

Subsidy programs do not help

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” on Wednesday, 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.

For example, the British “Help to Buy” program consisted of several components, one of which was the state’s auxiliary loans for the purchase of real estate. A household could obtain funding in the form of an interest-free loan, which reduced the requirements for the down payment and reduced the subsidies for the first years of loan repayment.

And what was the effect? ​​Prices in British cities rose, while construction activity did not change significantly. In contrast, on the border of England and Wales, where prices did not change significantly after the introduction of the program, construction activity increased.

Fewer and fewer apartments are being built

Preliminary estimates from the Central Statistical Office (GUS) indicate that in May, developers in Poland began construction of 11.9 thousand apartments. This is 5.2 percent less than in April, when a 20 percent drop was recorded. This means a return to the activity observed in the second half of last year.

According to data cited by “Parkiet”, in the first five months of this year, companies started building 66.5 thousand premises, 70 percent more than a year earlier, when the market was still in lethargy after the mortgage crisis and was waiting for the introduction of the Safe Credit 2 percent, a program of state subsidies for credit. After the program was launched in July, developers began to catch up with investments. The Safe Credit 2 percent turned out to be one of the last solutions introduced by the Law and Justice government.