There is one condition for the decline in housing prices – and it will not come true in 2024

Safe loan 2 percent  this is a lesson for the new government.  Is it possible to undo the price increase?

In 2024, developers will not deliver such a number of apartments that will allow real estate prices to fall. Regardless of the government’s intentions, no loan subsidy program will reduce prices.

The condition for the decline in apartment prices is not loan subsidy programs, but an increase in the number of available apartments, i.e. higher supply. It’s easy to see why. When there is little choice of apartments on the market and some buyers can take advantage of subsidies, sellers raise prices because they know that sooner or later there will be someone willing to buy them. The offer of the “Safe 2% loan” caused prices in the largest cities to increase by several percent within a few weeks. We write more about the mistakes of the previous government’s program in this article.

PIE: the supply of apartments in 2024 will still be too low

The Polish Institute of Economics does not have good news: according to analysts, in 2024 the availability of apartments (the above-mentioned supply) will be lower than in 2023. “In the beginning of the year, premises will appear on the market, the construction of which was started mainly in 2022 construction starts amounted to 200 thousand. It was a decrease of 27%. compared to 2021 and the worst result since 2017. The end of 2023 saw an increase in the number of construction starts, but this should not affect the supply of completed apartments in the beginning of the year. The number of apartments for which construction permits have been issued has also decreased since the record-breaking 2021. Back then, the number was 310,000, and last year – 240,000. We predict that in 2024 the number of apartments put into use will be approximately 200,000. and this will be the lowest result since 2018,” we read in the PIE analysis.

Low supply is unable to meet the growing demand for apartments. The growing demand is the result of the “Safe Credit 2%” program: according to BIK data, in the second half of 2023, an average of PLN 40,000 was submitted per month. housing loan applications and it was an increase of almost 200%. on a y/y basis. At the beginning of 2024, the demand for loans should decrease due to the suspension of the program.

The mood in the construction sector is still not good. Entrepreneurs will be more willing to build new apartments, but a significant revival should not be expected. The general economic climate index was -13.2 at the end of 2023. In 2022, this indicator was -23.9, and was last positive before the pandemic. This is the second worst result in the industries, next to industrial processing. The main problems for entrepreneurs are rising employment costs (70%) and material costs (55%).

Too few apartments are being built across Europe

The problem of too few completed apartments is specific not only to Poland, but also affects other developed European countries. The number of new building permits in Germany and France fell by 27%. in the first half of 2023, and in the UK the number of houses built is expected to fall by over 25% this year. In Sweden, the rate of new housing construction is less than one third of what is considered necessary to keep up with demand. Analysts from Fitch Ratings estimate that 2024 will bring a slight increase in apartment prices in developed European markets, but the problem will remain too low supply, especially in large cities such as Paris or Berlin.

The starter apartment will replace Safe Loan

On Thursday, Minister of Development Krzysztof Hetman presented the assumptions of a new loan subsidy program. He added that he wanted to know the position of banks and consumer organizations, so consultations dedicated to it would be held.

— We must maintain the possibility of increasing the construction of apartments, and this is what the “Mieszkanie na start” program is intended to serve — said the head of the Ministry of Development and Technology, quoted by Business Insider Polska.

The age limit for singles in the program will be 35 years. Other farms will not have such a limit. However, there will be income limits, the thresholds are to be:

  • 10 thousand PLN gross for a single room

  • 18 thousand for 2 persons

  • 23 thousand for 3 people

  • 28 thousand for 4 people

  • 33 thousand for 5 people.

Interest subsidies will be available for 10 years, but will amount to no more than:

  • 200 thousand PLN for a single-person household

  • 400 thousand PLN for a 2-person room

  • 450 thousand PLN for a 3-person room

  • 50 thousand each for each additional person.

The Minister of Development and Technology announced that the government’s new housing program will be launched in mid-year. Hetman also announced that PLN 500 million has been reserved for the program in the 2024 budget.

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