Have new banking regulations and government programs conquered housing sales

Did sales of new apartments rise in the first months of this year? What effect on demand has the lowering of the prudential buffer when banks calculate creditworthiness? Are the announced government support programs translating into increased interest in buying apartments? Can the change in lending conditions and the government's proposals heal the market?

Tomasz Kaleta, director of the Sales Department, Develia S.A..
Despite the fact that inflation, as well as interest rates, are still at record high levels and there is no end in sight to the conflict across our eastern border, the sales results of developers in the first quarter of this year testify to an improvement in sentiment on the part of buyers. Thanks to maintaining a wide range of offerings, we sold 533 apartments in the period, compared to 409 units that went to customers in the fourth quarter of 2022, an increase of 30 percent.

The improvement in sentiment is positively influenced by the announcement of the launch of the government's First Apartment program, of which the 2 percent Safe Loan is a part. We are seeing a lot of interest in this form of support and are informing our customers about the possibility of taking advantage of mortgage subsidies. Customers interested in the government subsidy in selected investments are allowed to conclude a developer's agreement with a payment of 20% of the value of the apartment and a deadline of September 30 this year to complete the formalities. In the second half of the year, when the program becomes effective, demand for apartments may revive even more.

Angelika Kliś, Atal board member
As expected, we have been recording increased interest in our offerings from buyers since March. We expect that from spring, due to, among other things, more lenient policies of banks in the context of capacity assessment and the announcement of a new government support program, sales will be higher than before.
In my opinion, the larger role in this recovery is played by the mentioned program. Demand and reservations of apartments from our offer are also supported by our proprietary Czas na mieszkanie program. It allows customers to choose an apartment at the prevailing price and sign a developer's agreement with a price and transaction guarantee. If, for various reasons, the customer does not receive a loan by September 28, he or she can withdraw from the contract without any consequences.

Is it time to trumpet the end of the market hole? Developers who have finished apartments on offer will certainly be positively affected by the program. However, with current interest rates, I would not expect such an increase in construction at developers who depend on bank financing for construction. A developer, when tying himself to a client, must guarantee a price to the client, while taking into account all risks and costs, such as increasing construction costs or paying the DFG contribution.

In addition, it takes more time for the supply side to adjust to the new circumstances and involves the entire investment process. Therefore, this situation will favor large developers. In addition to the program, a reduction in interest rates would also contribute to an improvement in the housing industry, which is important from the point of view of other customers who are not "caught" by the government program - the 2% loan.

Malgorzata Ostrowska, director of the Marketing and Sales Division at J.W. Construction Holding S.A.
From month to month we can see a clear improvement, sales are increasing. There is no doubt that this is a result of the changes made by the banks as a result of the FSA's revised approach to interest rate buffers. As a result, many customers have regained their creditworthiness, and our developments in Gdansk (Horizon Estate), Szczecin (Nad Odrą), Chorzow (Kosciuszko Estate) and Pruszkow (Stacja Centrum) have seen buyers of larger apartments for their own needs.

For many customers, the incentive is a special offer aimed at potential beneficiaries of the 2% Safe Loan program, thanks to which they do not delay the decision to choose an apartment until July and sign a contract with us now. However, a reduction in interest rates is necessary to revive the market, which all developers are waiting for.

Eyal Keltsh, CEO of Robyg Group
Sales results in the first quarter of 2023 are very promising. We see the beginning of a positive trend in the residential real estate market, which should be strengthened by government programs and the increasing availability of credit. Currently, almost 70 percent of customers buy apartments with cash, but even so, demand is significant.

Certainly, government programs will be an important support for customers and make it easier for them to invest in their own property. For example, the First Apartment program, which is designed to help young people finance the purchase of their first apartment or house, or Housing without a Contribution. Support can also be provided by planned financial solutions: a low-cost loan with government subsidies and a special savings account. It's important that these programs will have such a broad coverage for people under 45 and married couples, with no limit on the price per square meter. As a result, the residential real estate market will recover very quickly.

An additional factor assisting borrowers is the FSC's recent decision to relax credit ratings. According to the FSC's decision, the lowest minimum buffer level of 2.5 percentage points should be applied to loans with a temporarily fixed interest rate. This means that credit availability will increase.

It is also very important to speed up administrative procedures, i.e. the issuance of permits by local governments. Paperwork processing times have increased sharply since the pandemic. This makes customers have to wait longer for apartments, supply decreases and price pressure increases.

Boaz Haim, president of Ronson Development
We already saw an improvement in consumer sentiment in the last months of 2022, especially in November and December. January 2023 was already very good in terms of sales performance. In the first quarter of this year, we sold a total of 233 units, a result more than double that of last year and an increase of more than 50 percent compared to the fourth quarter of 2022.

The significant market rebound is likely due to the change in the FSA's recommendation on calculating customers' creditworthiness, the MPC's subsequent decisions not to raise interest rates, or the announcement of the government's 2% Safe Credit program. Also of great importance is investors' belief in the benefits of investing in the real estate market, both in terms of preserving the value of money and profit when selling property. We expect the positive dynamics to continue in the next quarters of 2023 as well.

Cezary Grabowski, sales and marketing director of Bouygues Immobilier Polska
Our estates are enjoying unflagging interest, and since the beginning of the year we have recorded record sales increases. Since January to date, we have over 300 contracts signed for apartments, and we know that this number will grow, as our customer advisors are already reporting numerous inquiries related to, but not limited to, the new housing program.

We see that people interested in buying an apartment are not holding off on their decision until July. The FSC's decision regarding the safety buffer, as well as the halt in the rise of interest rates and the slow decline in inflation, have made customers want to buy an apartment right now. Our observations show that the number of people financing their investment with a loan is steadily increasing, and this group now accounts for 20% of our customers.

Zuzanna Należyta, commercial director at Eco Classic
Any facilitation in the purchase of apartments by state institutions has an impact on the revival of demand, including a change in the KNF's recommendation on how to calculate creditworthiness and the 2% Safe Loan Program. Since February, we have seen a significant revival in the market. We are about to launch sales of the new phase of the Moja Północna project, and we already have signals from customers that they are interested in the offer.

However, it is difficult to talk about a recovery of the market or a return to relative normality. Market stability is a balance between supply and demand. Then prices are stable. If prices did not fall during last year's sales crash, it means that supply is significantly too low. Developers are able to build more, but there is a need for greater availability of land, simplification of procedures and, above all, not hindering companies, which is true of all industries in Poland.

Source: dompress.pl
Photo: River Point - Archicom