Sales of new homes in Poland’s seven largest cities were 38% lower in 2022 than the previous year, a report by the country’s biggest real estate listings page, Otodom, has shown.
After years of a boom in Poland’s real estate market, demand for new homes has slowed considerably due to rising interest rates and a decline in credit availability for lower earners. The fall in sales has not, however, translated into a drop in prices, which continued to rise last year.
Developers sold 40,900 new homes in Warsaw, Kraków, Katowice, Wrocław, Poznań, Gdańsk and Łódź in 2022, show Otodom’s data. That was the lowest annual figure since 2014, notes the firm.
While last year started strongly, with 5,600 homes sold in January, each subsequent month saw a decline, bottoming out at a figure of 2,200 in August. By December, however, numbers had picked up, reaching 3,900 units sold.
Otodom’s figures mirror those from other sources. In October, data from construction firms showed that, in the first nine months of 2022, the number of homes sold was 35% lower than a year earlier, reported financial news service Bankier.pl.
Poland’s Credit Information Bureau (BIK), which collects data from banks and credit unions, also reported that the number of new mortgage applications was 63% lower in November year-on-year. In August it had recorded a drop of 71%.
However, despite a falling number of sales, Otodom noted that prices per square metre of sold units increased 9% year-on-year in 2022, from 10,800 zloty to 11,800 zloty (€2,309 to €2,523).
The biggest rise, of 14%, was recorded in the capital, Warsaw, followed by Katowice (12%) and Poznań (11%). The smallest increases were seen in Kraków (5%), Łódź (6.1%) and Gdańsk (7%).
Year-on-year change in average price per square metre of homes sold on the primary market in 2022 (source: Otodom)
According to experts, housing prices were bound to rise, at least in nominal terms, as the costs of development – in terms of both material and labour – are increasing. In real terms, however, prices remain more or less stable as their growth remains below inflation, which in November was at 17.5%.
“New investments, which are launched in spite of the current market situation, would not be put on sale if construction companies did not expect at least the current price levels to be maintained,” said Tomasz Łapiński, managing director of residential investments at Cordia Polska, quoted by Business Insider Polska.
Otodom’s experts agree, also adding that in their opinion demand has not been reduced but rather postponed. Poland, in fact, is still struggling with a shortage of housing, especially after an influx of hundreds of thousands of refugees from Ukraine since February pushed up rental prices.
“In a survey conducted in the middle of the year, potential buyers confirmed their willingness to buy. The problem is the high uncertainty in the market,” said Katarzyna Kuniewicz, head of research Otodom Analytics. “The first signs of improvement towards the end of the year resulted in higher sales in December.”
“Those buyers who can and want to buy, do so. Others wait for the situation to improve or for the occasional opportunity to present itself,” she added.
Łapinski notes that “the market is still dominated by cash investors and people who finance the purchase of a new, usually larger home for their own needs with the proceeds from the sale of another property”.
Meanwhile, buyers hoping to finance the purchase with a mortgage face the highest interest rates in almost two decades, which have been at 6.75% since September.
Poland's central bank has hiked interest rates by 25 basis points in a bid to fight continued accelerating inflation.
The 11th consecutive increase, widely expected by economists, brought interest rates to 6.75%, the highest level since Poland joined the European Union pic.twitter.com/X0L99MyEMP
— Notes from Poland 🇵🇱 (@notesfrompoland) September 7, 2022
Last month, the government announced that it was working on a programme to make it easier for young people to buy their first home by providing them with a fixed interest rate of 2% for 10 years.
Funding will be available for both married couples and singles up to the age of 45. The government says it plans to launch the scheme, titled “First Home” (Pierwsze Mieszkanie), by the third quarter of 2023 at the latest.
Previously, the government unveiled plans to boost the housing stock by turning vacant shopping malls and offices into apartments. Data from the 2021 national census also showed that around 12% of dwellings in Poland were uninhabited.
Main photo credit: Maciej Drążkiewicz/Unsplash
Alicja Ptak is senior editor at Notes from Poland and a multimedia journalist. She previously worked for Reuters.
