The landscape of the housing market

Experts from the real property and banking industries as well as local government officials reflected on the situation of the housing market after the launch of the 2% Secure Loan programme. The discussion was held in the Rzeczpospolita Lounge during the 23rd Economic Forum in Karpacz.

– “The demand from 2022 has been deferred, and this is the primary factor influencing the current housing market situation. Many individuals who had planned to purchase a property outright last year but refrained from doing so due to economic uncertainties and the war in Ukraine, have now chosen to proceed with their purchases this year.” Waldemar Buda, Minister of Development and Technology, listed the factors that he believes caused the property market to recover over the summer.

He noticed that the 2% Secure Loan programme designed for young people has helped, but those who use it represent a dozen or so per cent of home buyers. – “The majority of buyers are cash-paying customers and those using the 2% Secure Loan programme do not even make up half of those financing the purchase with loans.” He presented data showing that, out of 42,000 loan applications submitted in July, 18,000 are due to the scheme to support the purchase of the first home.

Developments in the housing market

– “The loan under the programme has influenced higher sales volumes. In August last year, 67% of flat purchases were in cash and 37% were on loan. Currently, the proportions are reversed”, said Dr. Iwona Sroka, member of Murapol’s Management Board. The majority of the flats of this developer meet the criteria of the 2% Secure Loan programme. – “Figures from the last two months show that around 47% of transactions involve customers who have received or are applying for a 2% loan, of which 30% also participate in the contribution guarantee scheme.” This recovery in the industry is needed after a difficult last year and the beginning of this year. – “Due to the uncertainty on the demand side, developers held back on launching new projects in the early months of this year; 30% less construction programmes had started by May this year as compared to a year earlier”, said Iwona Sroka quoting the Statistics Poland’s data.

In her opinion, rising property prices are not only due to the impact of the 2% Secure Loan programme but also to a wider range of market conditions, including higher development finance costs, inflation, costs of building materials and labour market, new regulations (including the Open Housing Trust Account, or OMRP), and the market situation, i.e., housing demand and supply. – “The cost of implementation of a development project is also affected by the time and resources to be involved in obtaining approvals and permits”, she added. She believes that there are no indications of a downward trend in housing prices. On the contrary, housing prices will not fall, in particular because of the upcoming EU regulations on ESG, circular economy, and decarbonisation.

Pay attention to documents

The programme also revives the banking industry. – “Around 42,000 loan applications have already been submitted, but it is worth remembering that some people submit them to several banks at the same time”, noted Dr. Przemysław Barbrich, Director of the Communication and PR Team at the Polish Bank Association. He admitted that due to the changing prices of properties and the attractiveness of some of the offers, clients sign preliminary agreements without thinking that they might not instantly receive a decision from the bank. – “Banks have 21 days to respond, but this is from the moment they receive all documents”, he noted.

– “The development of individual housing is also important for local authorities. Young people are supposed to find work, settle down, and decide to start a family. If they own the flat instead of renting in the grey area, they pay taxes”, explained Jacek Jaśkowiak, Mayor of Poznań. In addition to new housing, local communities expect that the existing resources will be revitalised. – “Local authorities need money for revitalisation. It is good that the government has allocated PLN 1.5 billion for it. This is an example of useful measures above divisions”, he added. Interestingly, in Vienna, the municipal resources account for 35–40%. Perhaps, the resources for the council and local government housing should be increased in case some people cannot afford privately owned flats.

To own or to rent?

– “Poles want to be owners more than renters. The good thing is that most people want to own flats rather than rent”, believes Waldemar Buda. In his opinion, this means that wages are rising at a similar rate to housing prices. – “A man who was born in Paris is not expected to buy a flat as his ratio of future income to property prices is radically different from ours. The situation is temporary. If someone earns an average income and lives in a big city, they are capable of buying a flat”, he said, adding that the desire to own a flat is the only form of long-term saving that people commonly opt for. – “If someone is not going to put aside money for a flat or pay back the loan, they will not generate savings at all. There is no culture of saving in our country, hence the idea of a housing account to get prepared for the purchase of a flat. Own contribution for housing should always be the case”, he believes.

Iwona Sroka expressed a similar opinion. – “The rental market is complementary, especially in times of high interest rates as not all people can take out a loan.” In her view, the resources for good-quality rental housing should complement the sales market. – “Sometimes, it is even easier to find a suitable land and build buildings for institutional rental, which is a diversification of the developer’s core business in the housing market.”

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