Housing prices still on the upswing. What will the coming months bring?

According to the NBP quarterly report, in the first three months of 2024, significant changes in demand and supply observed in previous years slowly began to stabilize. On the supply side, the offer of contracts for the construction of apartments and the number of apartments under construction increased.

Meanwhile, the number of sold development contracts for the construction of apartments in the largest markets decreased compared to the previous quarter and amounted to approx. 11 thousand. In the period from Q2 2023 to Q1 2024, a total of approx. 57.2 thousand contracts for the construction of apartments were sold, i.e. approx. 21.2 thousand more compared to Q2 2022 to Q1 2023 (+59% y/y).

Apartment purchases were financed from own funds in approx. 45% (compared to 58% in the previous quarter and 83% in Q1 2023) with a significant increase in the share of credit, including government funding Safe Credit 2%. The expiration of this subsidy program at the end of 2023 slowed down housing demand without additional disruptions, as demand was supported by, among other things, strong wage growth. However, the pace of growth in apartment prices increased due to the still low supply.

– In April, 1/5 more constructions were reported and started than a year ago, but this does not mean that there will be more apartments on the market and their prices will be lower – says Kuba Karliński, founder of Magmillon, author of the book “Let’s Make Money on Real Estate” in an interview with MarketNews24. – Very high inflation and high interest rates caused developers to freeze many investments, while the rapid recovery was caused by the then government’s Safe Credit 2% program, also causing an acceleration in the growth of apartment prices. Now the situation is returning to normal.

How have property prices changed?

According to the Central Statistical Office, in the first quarter of 2024, the prices of residential premises in Poland increased by 4.3% compared to the fourth quarter of 2023. On the primary market, this increase amounted to 4.7%, while on the secondary market – 4.0%. Compared to the same period of 2023, the prices of residential premises increased by 18.0% (including on the primary market by 19.6%, and on the secondary market by 16.4%).

In Q1 2024, there was a year-on-year decrease in the number and area of ​​apartments put into use. On the other hand, the number of apartments whose construction has started and apartments for which construction permits have been issued or a notification with a construction project has increased.

In the first three months of 2024, 48.3 thousand apartments were put into use with a total usable area of ​​4.4 million m2 and 184.6 thousand rooms. Compared to the same period of the previous year, there were decreases: in the number of apartments by 6.8 thousand (12.3%), in the usable area of ​​apartments by 881.8 thousand m2 (16.7%) and in the number of rooms by 34.6 thousand (15.8%).

In the period January-May 2024, fewer apartments were put into use than a year ago. On the other hand, the number of apartments for which construction permits were issued or a notification with a building project was made and the number of apartments for which construction began increased.

According to preliminary data, 78.7 thousand apartments were put into use in the first five months of 2024, i.e. 15.9 percent less than in the same period of 2023. Developers put into use 47.7 thousand apartments – 6.4 percent less than a year ago, while individual investors put into use 29.1 thousand apartments, i.e. 29.2 percent less.

What will happen to apartment prices?

What will happen in the coming months to prices, whose growth has recently slowed down?

– It is worth noting that from August 1, a regulation will come into force that will change the technical conditions that must be met in newly constructed buildings, which will increase construction costs and make some investments more difficult. And this is one of the reasons for prices to rise again. – comments Kuba Karliński, founder of Magmillon. – The market has also been very unstable for too long, developers include the risk of further destabilization in the investment costs, since the construction of new apartments is an investment lasting 5-6 years.