Buy or wait for cheaper housing?

Is it worth waiting for housing prices to fall? This was the question posed by Marcin Piasecki, managing editor of Rzeczpospolita, as he opened the debate "Offer-Price-Accessibility: How Does the Developer Market Respond to the Housing Needs of Poles?" in Karpacz.

Iwona Sroka, a member of Murapol's management board, advised against waiting for prices to drop, emphasizing that the current offerings from developers are broad, diverse, and very attractive. She believes the current decline in housing sales due to lower credit availability is only temporary. "Therefore, if one has the ability and creditworthiness, one should not wait."

Market data supports the notion of a robust selection of flats. As Katarzyna Kuniewicz, director of the research department at Otodom Analytics, calculated, there are currently 52,500 units available from developers in Poland's seven largest cities, compared to 37,000 a year ago and 34,000 a year and a half earlier. Including the outskirts of large cities (known as 'obwarzanki'), the total offer comprises 75,000 units.

"Currently, we are also seeing a rare stabilization in residential prices, which are still lower in Poland than in Western and Northern Europe or the Czech Republic," noted Mateusz Bonca, president of JLL. He believes that the Polish residential market will not become cheaper in the coming years.

Katarzyna Kuniewicz pointed out that the last time it was worth waiting for prices to drop was in 2009, following the financial crisis. Since then, housing prices have generally been on the rise. She warned that postponing the purchase of a flat now in the hope of a price drop might backfire; there is no guarantee the desired flat will be cheaper or even available in a year or two. This is especially true as a new group of buyers has emerged in large cities - affluent individuals who can afford larger units with even higher loan costs.

This trend of wealthier customers taking on home loans with an average repayment term of 22.5 years was also confirmed by Agnieszka Wachnicka, vice-president of the Polish Bank Association. Both experts highlighted the opportunity costs, including the high cost of renting, which remains elevated following a spike in 2022. As the vice-president of the Polish Bank Association pointed out, today’s rental costs can exceed the cost of a mortgage, which is expected to decrease next year with anticipated interest rate cuts.

"After a potential interest rate cut, today's wide and attractive selection of flats may shrink as more people rush to take advantage of more accessible mortgages," assessed Iwona Sroka. Katarzyna Kuniewicz reminded the audience that while consumers (the demand side) can make quick decisions, developers (the supply side) cannot, due to the long duration of investments.

Debate participants agreed that the persistently large housing gap should encourage decisions to buy flats, given the large selection and price stabilization. Bartosz Guss, director general of the Polish Association of Property Developers, recalled that various estimates indicate a shortage of 1–2 million flats in Poland.

"The high housing deficit means that when credit conditions improve, strong demand quickly re-emerges," Sroka pointed out, citing the rapid boom following the introduction of the 2% loan program.

While the accompanying housing price boom has boosted developers' performance, Guss noted that the industry would benefit more from predictable government action and a stable environment. "The most important thing is predictability, because residential investments are long-term projects," Bonca emphasized, noting that impulsive events have disrupted Poland's housing market in recent years.

Currently, the large housing supply is partly due to some consumers holding off on purchases as they await concrete government decisions on the 0% loan.

“The problem with all housing purchase support programs is their short-term nature, emphasized the vice-president of the Polish Bank Association. She argued that it is time to define, in the long term, who should be supported. "If we want greater housing availability, let's help the average Kowalski, both in terms of instruments supporting home ownership and renting," urged Iwona Sroka. Supporting the idea of basing housing policy on multiple pillars, she emphasized that developers are allies of the government’s housing policies, viewing them as complementary to their business.

Developers, she noted, have delivered more than one million new homes to the market in recent years.

As Katarzyna Kuniewicz highlighted, 60% of flats and houses in Poland are produced by the property development industry, 38% are self-builds, and only 2% are public investments, including TBS. According to the Otodom expert, the share of individual investments will decline in the future due to increasing environmental requirements for house construction.

Developers are already feeling the impact of these heightened requirements, but, as Sroka pointed out, they are accustomed to managing various regulatory and technical challenges. They are already adept at navigating lengthy permit processes and fulfilling requirements for the construction of infrastructure, such as roads or schools, for the benefit of municipalities - factors that increase investment costs.

As Mateusz Bonca estimated, depending on government policy, that housing prices will be either slightly or significantly higher within two years. Kuniewicz added that the increasingly capital-intensive nature of construction will also drive consolidation in the currently fragmented development industry.

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