Housing price growth will slow even more. But will prices fall?

– According to NBP analyses, in Q1 2024 compared to Q4 2023, housing prices increased by 9.8% and this is the end of the shopping frenzy observed in the second half of last year – says Kuba Karliński, founder of Magmillon, author of the book “Let’s Make Money on Real Estate” in an interview with MarketNews24. – Price growth has slowed down and now we can wonder what’s next, whether prices will fall.

Real estate prices in Q2 2024

Data collected by specialized portals concern offer prices. In Q2 2024, there was a 14% increase on the primary market and an 18% increase on the secondary market compared to the period a year ago. This is less than between the first quarters of 2024 and 2023, when the increases amounted to 15 and 19%, respectively. Currently, the fastest growing prices of residential premises are in Kielce, Kraków and Rzeszów, but there are also minimal drops, as in Opole and Olsztyn.

Offer prices on the primary market grew very quickly year-on-year, according to NBP data for Q1 2024. In Warsaw, from PLN 13,302 to PLN 16,191 per 1 square meter. This is an increase of 21.7%. For the 7 largest housing markets (Gdańsk, Gdynia, Kraków, Łódź, Poznań, Warsaw, Wrocław), prices increased from PLN 11,919 to PLN 14,155, i.e. by 18.7% year-on-year. For comparison, a year earlier, when the PiS government’s pre-election program “Safe Credit 2.0” was not in force, prices on the primary market changed in the seven most important housing markets from PLN 11,034 per square meter in Q1 2022 to PLN 11,919, i.e. by 8.0 percent. While in Q2 2023 the average price for these cities was PLN 12,253, the announcement of the program’s introduction and the period of its validity contributed to the price increase to PLN 14,155 (average developer price in Q1 2024), i.e. by 15.5 percent higher.

Offer prices vs. transaction prices

Transaction prices were – as shown by the NBP analysis for the first quarter of 2024 – lower than the offer prices by almost 10 percent, as in the case of Gdańsk, for 7 cities it was an increase from PLN 11,327 to PLN 13,500, i.e. by 19.2 percent.

– Now a lot will depend on what happens with the government program, already announced by the new, ruling coalition, and called “0% credit” – comments Kuba Karliński, founder of Magmillon. – If the program comes into effect, we will probably see double-digit price increases again, and a price increase of 15-20 percent by the end of this year is a frugal calculation.

The program is undergoing further modifications, and the enthusiasm for its introduction is rather waning, especially due to the very heavy burden on the state budget, and therefore on taxpayers.

The government has decided to listen to experts who say that the program will not be beneficial to buyers because it will stimulate demand and lead to accelerated price increases.

– If this government program is not implemented, I would expect prices to increase by 10 percent this year and I treat it as a minimum – adds K.Karliński. – We still have high inflation, and energy prices are rising, and developer margins are decreasing, so we cannot expect prices to start falling. Waiting for the situation to develop, developers are limiting supply.