Housing prices will not fall

Despite the reduction in demand, the increase in construction costs will also reduce the supply in the housing market.

Publikacja: 08.09.2022 22:33

Panellists agreed that today housing is sold mostly for cash

Panellists agreed that today housing is sold mostly for cash

Foto: Bartek Dąbrowski, fototaxi.pl

The outbreak of war in Ukraine has caused problems in many respects, but has particularly affected the housing market. Representatives of the industry discussed the challenges involved during the Economic Forum in Karpacz. Research cited by Dr Adam Czerniak of the Warsaw School of Economics, who moderated the discussion, shows that housing prices in all countries in the region grew faster than per capita income between 2016 and 2021. This means that an average Pole on an average salary could buy an increasingly smaller unit. A maximum of 60 m2 – this is the lowest result among countries in the region.

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Ceny mieszkań nie spadną

However, Iwona Sroka, Member of the Management Board of Murapol SA, pointed out that the ratio of the average salary to the price per square meter in previous years was still significantly lower than in 2007–2008, and this despite price increases outpacing wage growth.

– The problem of Poland’s high housing deficit, which is estimated at around 2 million units, is not going anywhere, I. Sroka stressed. – In the development business, the experience gained from the previous crisis and a well-tailored housing offer will not be insignificant in these challenging times. At the time, Murapol had just developed one. So, I do believe that there are some good perspectives for the industry. This year, the average area purchased was 43 m2 at an average price of approximately PLN 370,000. In my opinion, this is adequate to the needs and capabilities of Poles, she added.

Poland’s rate of housing units per 1,000 residents is among the lowest in Europe. And while interest rate increases result in a strong decline in customer creditworthiness, there is also a group that has savings and buys flats to protect their funds against inflation. These people dominate in the sales structure in 2022.

Smaller number of loans

Mateusz Bońca, CEO of JLL Poland, admitted that the answer to declining availability for individual customers may be to target investors. Andrzej Oślizło, CEO of Develia SA, pointed out that despite the change in the structure of customers (in the past buyers using credit predominated, now 80% are “cash buyers”), sales fell 40% in Q2 (as compared to the previous three years). Furthermore, Iwona Sroka pointed out that previously about 35% of customers financed the purchase with cash and 65% with credit. Today, these proportions are reversed.

– Banks must additionally take into account a 5% buffer resulting from the prudence recommendation of the Financial Supervision Authority, which does not improve the situation for those seeking a loan for a flat, I. Sroka added.

The panellists also agreed that a big support for the industry would be the reinstatement of programmes that would make it easier to get credit, such as MdM or Mieszkanie+ [Home+]. Otherwise, those looking for housing will be pushed into the rental market.

Less construction

Participants in the discussion also agreed that there are no factors in sight that could cause housing prices to fall in the near future. Although sales of flats have fallen, the increase in the cost of materials means that fewer flats will be built.

– We had hoped for stabilisation in the construction materials market, but the feedback from suppliers and manufacturers shows otherwise, as the price of electricity and gas is rising, as well as the euro exchange rate, explained Iwona Sroka. – Fuel, energy and raw material prices will affect the final prices of construction materials. In 2021–2022, the increases were felt especially in heavy materials, i.e. OSBs, thermal insulation (styrofoam, wool), and all materials manufactured from steel, aluminium, an wood, I. Sroka enumerated.

In turn, Andrzej Oślizło pointed out that about half of the cost of building an apartment is salaries. This item will, therefore, increase in line with the pressure on raising salaries caused by rising inflation.

The availability of land for construction was also raised during the discussion.

– A lot of land in cities, for example, is agricultural or post-industrial land that could be developed for housing, I. Sroka said. – Several factors contribute to the problem of acquiring new land, such as administrative requirements; the processes involved in obtaining further decisions take a long time. The pandemic has led to a significant extension of all proceedings, which affects the unpredictability of the market situation, Iwona Sroka stressed.

Partner relacji: Murapol

rp.pl

The outbreak of war in Ukraine has caused problems in many respects, but has particularly affected the housing market. Representatives of the industry discussed the challenges involved during the Economic Forum in Karpacz. Research cited by Dr Adam Czerniak of the Warsaw School of Economics, who moderated the discussion, shows that housing prices in all countries in the region grew faster than per capita income between 2016 and 2021. This means that an average Pole on an average salary could buy an increasingly smaller unit. A maximum of 60 m2 – this is the lowest result among countries in the region.

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