From numbers to feelings. A revolution in housing

Macroeconomics should support a new wave of demand for housing. Stable economic growth, falling interest rates and stabilized inflation create classic conditions for the revival of the housing market. Meanwhile, BIG DATA RynekPierwotny.pl data show that sales remain relatively weak, and the recovery, which was almost certain in previous cycles, is still not coming in 2025. Why?

– Subjective concerns about the professional situation often have a stronger impact on economic decisions than hard data. This is enough to postpone the purchase of real estate, especially with a loan – explains Jan Dziekoński, Head of Market Insights at RynekPierwotny.pl.

Has the labor market stopped driving the housing boom?

The analysis carried out by experts from the RynekPierwotny.pl website indicates that the source of this discrepancy does not lie directly in the macroeconomy, but in the labor market. Although unemployment remains low statistically, recent data indicate a slight upward trend of approximately 0.5 percentage points year on year. However, consumer sentiment indicators show growing concerns about job stability and future incomes. They are the ones that most inhibit decisions about purchasing an apartment.

In practice, this means that even with favorable economic conditions, potential buyers remain cautious and the housing market reacts differently than before the pandemic – largely driven by the perception of financial security and employment stability.

Mirror image of markets

For almost 15 years, the housing market and the labor market situation behaved like mirrors. The decline in unemployment increased the sense of financial security, improved creditworthiness and encouraged people to decide to buy apartments, which drove demand and prices. The increase in unemployment, however, inhibited the market and slowed down price dynamics.

– This pattern was so predictable that it could be treated as a “mirror image”: a change in one direction on the labor market was likely to translate into a movement in the opposite direction on the housing market. Developers, investors and analysts could predict the next phases of the business cycle quite accurately – explains Jarosław Jędrzyński, an expert at the RynekPierwotny.pl portal.

The pandemic has changed the rules of the game

Experts indicate that the pandemic was a breakthrough moment that completely changed the existing market mechanisms. Markets that previously responded predictably to changes in employment suddenly lost their natural cyclicality.

– The pandemic has disrupted the existing mechanisms. Interestingly, it is not because of the lockdown itself or economic uncertainty, but because the labor market has lost its natural cyclicality, says Jędrzyński.

Instead of the typical increase in unemployment, there was a shortage of workers.

– The labor market operated in conditions where there was a shortage of workers, not work for people. This phenomenon was additionally strengthened by demographic factors and economic immigration. As a result, unemployment rates stopped responding to changes in the economic situation, and therefore lost their role as a barometer for the real estate market – emphasizes the expert.

The housing market reacted unexpectedly: home prices continued to rise, even though classic “mirror image” logic would suggest a slowdown. This was the first clear signal that the current model of the relationship between the labor market and real estate was no longer working.

Financial psychology drives housing

In the last dozen or so months, the labor market has again begun to influence the housing market, but in a completely new way. According to experts from the RynekPierwotny.pl website, it is no longer about unemployment rates alone – now decisions about purchasing apartments are shaped primarily by emotions and a sense of job security.

– The growing role of financial psychology means that the housing market today reacts to employees’ emotions faster than to hard economic data – notes Jędrzyński.

Consumer sentiment surveys show that Poles are becoming more and more cautious when planning their professional future. Uncertainty related to income stability delays decisions about purchasing real estate, even with lower interest rates and better access to mortgage loans.

From numbers to feelings – a new mechanism of housing demand

The housing market no longer responds solely to hard employment data. The impact of the labor market on household purchasing decisions is undergoing a profound transformation, and classic indicators are no longer sufficient.

– Before the pandemic, it was enough to track unemployment readings to predict changes in demand and real estate prices with a high degree of certainty. Today it is no longer enough, says Jędrzyński.

Currently, the subjective sense of financial security and certainty of maintaining income play a key role. Even if macroeconomic numbers look good, lack of consumer confidence could hamper demand. On the other hand, an improvement in mood can quickly “free” previously postponed purchase decisions.

This means that analysts and developers must use new tools – from consumer sentiment indicators to elements of behavioral economics – to accurately predict market dynamics. In times when emotions count as much as numbers, traditional models need an urgent update.

Uncertainty rules the real estate market?

Changes in the perception of professional stability affect every side of the housing market – from people planning to buy, through developers, to investors. In the face of job uncertainty, market participants must adapt their strategies, and demand and offers are evolving in a new direction. Here are the prospects of the three main groups of market participants.

For buyers:

• Faced with job uncertainty, consumers are more likely to postpone the decision to buy a home or choose more conservative options.

• Part of the demand is shifting to the rental market or focusing on cheaper, smaller premises.

• There is growing interest in the segment of apartments with a higher energy and operational standard, which proves the growing awareness of long-term maintenance costs.

For developers:

• Customers are more cautious – developers should flexibly adjust the offer to changing preferences.

• It is important to offer more flexible purchase conditions and increase the share of projects with a higher functional standard while maintaining competitive prices.

• Building trust by communicating investment stability and full transparency of the purchasing process also becomes crucial.

For investors:

• Career uncertainty increases the attractiveness of rental investments, especially in large cities with high employee mobility.

• Long-term investors should analyze local labor market conditions and potential changes in the employment structure that may affect rental demand.

A new “mirror” of the housing market

Today, the market is guided primarily by employment stability and employee sentiment, which requires taking into account psychological and behavioral aspects when making investment decisions.

– The “mirror image” between the labor and housing markets has not disappeared. It is simply reflected in a different mirror today – not statistics, but emotions – sums up Jędrzyński.