Real estate prices. This is how the famous invisible hand of the market works

According to the latest reading of the Apartment Price Barometer of the website Tabofert.pl, the housing market is ruled by an invisible hand. Lowering prices resulted in an increase in sales. New apartments are more expensive only where the choice of premises is smaller.

• Price drops in large cities: average prices of new apartments in 7 out of 17 cities in Poland monitored by the housing portal latkaofert.pl in October 2024 dropped. Price increases were recorded primarily in towns where new, more expensive investments were introduced for sale and where the number of available apartments on the market was relatively (taking into account the size of the urban center) lower.

• The increase in sales in developers’ offices reached 17.4%. Developers intensified promotional activities, which translated into buyers’ decisions. Customers started looking for apartments, especially in places where they could count on discounts and attractive offers.

• At the same time, we are observing increased interest in cheaper apartments. Buyers are looking for favorable offers, often choosing smaller apartments or locations outside large cities. Among apartments meeting these two criteria, a sharp increase in sales was observed in October – reaching 52.2%. It is therefore clear that buyers have stopped waiting for the announced loan subsidies and are focusing on attractively priced options.

Real estate prices are falling

The average price per square meter of a new apartment decreased in 4 of the 6 largest cities: in Kraków (-0.7%), in Wrocław (-0.7%), in Poznań (-1.0%), and, above all, in Łódź ( -5.0%). Interestingly, it is in these cities that the largest increase in new offers has recently occurred. Decreases in the average price per square meter were also recorded in Rzeszów (-1.9%), Białystok (-1.3%) and Bydgoszcz (-0.1%) and in the Tricity agglomeration (-0.5%). In Łódź, the average price drop is also the result of the fact that apartments just being put up for sale were priced lower than those on the market.

Among large cities, an increase in the average price per square meter occurred only in Warsaw (+1.5%), Gdańsk (+1.9%), but this was due to projects put on sale in more expensive locations. But it is worth adding that in these cities the offer has recently grown slower than in Kraków, Wrocław, Poznań and Łódź.

Increases in the average price per square meter occurred in several smaller centers and were caused by the launch of new projects in more prestigious locations. This was the case in Gdynia (+9.4%), Szczecin (+4.0%), Katowice (+0.2%), Kielce (+0.6%), Gliwice (+0.8%) and the Silesian agglomeration ( +2.1%) Poznań (+3.4%), Warsaw (+0.7%) and also in holiday projects (+0.9%).

This is how the market works

– Since private investors are responsible for the construction of over 98% of apartments in Poland today, it could not be otherwise. The invisible hand of the market acted: large supply caused a decline in sales in the previous months, which forced price reductions and promotions, which in October encouraged buyers to make a decision – points out Robert Chojnacki, founder of the website Tabofert.pl.

He adds that if new investments increase the average price per square meter, this happens mainly in places where the choice of apartments is limited.

– This is how the law of supply and demand works. I have been analyzing the market for 25 years – and each price drop did not last long and was not deeper than a few percent. Customers understand this well: they take advantage of the opportunity and buy without counting on state support, even if it means a horrendously high credit burden. As a result, they often buy smaller apartments or those located further from the center – emphasizes Robert Chojnacki.