Poland: With the fall of inflation, have the prices of new flats stopped rising

With the fall in inflation, have the prices of new flats stopped rising? Can we expect further rises this year? Which ones? What factors will determine this?

Tomasz Kaleta, Sales Department Director, Develia S.A.:
In 2024, we are seeing increases in housing prices, although they are of a milder nature than in the past 12 months. The reason is largely due to the narrow range of available land for residential development, which is also getting more expensive all the time. After a period of some stabilisation in the prices of general contracting, we are also seeing increases here, which is linked to the release of funds under the National Reconstruction Plan and an increase in demand for construction services.

Zbigniew Juroszek, CEO of Atal:
We expect housing prices to be fairly stable this year, with more movement expected towards the end of the year, due to the new loan programme, or an increase in the cost of workmanship and materials once the first investments financed by the unlocked NERP start to take off. In such a scenario, we can assume a moderate increase of a few per cent in housing prices throughout 2024.

This year, we expect the market trends initiated in 2023 to continue. We see that administrative and bureaucratic issues will continue to affect supply in the primary market. They will be one of the key drivers of rising operating costs, which ultimately translates into a higher final cost of purchasing a flat.

The largest property development companies will improve their competitiveness by being able to purchase large plots of land, allowing for multi-phase developments. They will also have access to attractive financing for their projects. Additional stimulus factors may include both interest rate cuts in the second half of the year and the launch of new government support for home buyers.

Zuzanna Należyta, commercial director at Eco Classic:
Neither the increase nor the decrease in inflation is directly proportional to the increase in housing prices. It is clear that the prices of energy, transport and materials have a significant impact on housing price increases, but these are not the only price drivers for flats. What is crucial in this market is the relationship between supply and effective demand, i.e. not interest in housing, but real purchasing capacity.

Supply, due to the shortage of land and formal procedures dragging on for years, is shrinking year by year and, with demand stimulated by government programmes, this is a ready recipe for another price increase.

We estimate that prices will rise at a rate of 1-2 per cent per month until mid-year. We anticipate a significant rebound in prices in the second half of the year.

Małgorzata Ostrowska, Director of the Marketing and Sales Division at J.W. Construction:
Housing prices are rising and unfortunately this process will not be stopped by falling inflation alone. Many other factors have an impact on the price of real estate. Firstly, we are dealing with very high land prices, the availability of which is decreasing, and therefore their purchase is associated with ever higher costs.

Then there are the ever-increasing costs of realising investments, not least through rising staff salaries and new legal and technical regulations. All the time-consuming formalities and administrative processes involved in construction are also another cost. All this adds up to the final price per m2.

Damian Tomasik, CEO of Alter Investment:
The slowdown in inflation is certainly a good prognosis for the stabilisation of housing prices, however, the changes that are taking place in terms of regulations on technical conditions may bring further waves of price rises. The requirements that are being placed on developers due to these changes will translate into the quality of the flats being built, but it is to be expected that this increased quality will result in further price increases.

Joanna Chojecka, sales and marketing director for Warsaw and Wrocław at Robyg Group:
The prices of flats are mainly determined by the prices of construction materials and the low supply, which is the result of administrative procedures that are too slow. The waiting time to obtain a building permit currently takes about 1.5 - 2 years, whereas it used to be 6-9 months. The limited access to land, as well as the low number of building permits issued, significantly slows down the process of project implementation and also affects the systematic increase in housing prices. Therefore, the state administration as well as the local government should facilitate procedures as much as possible so that construction can be carried out as efficiently as possible. This is an area that should definitely be improved.

Andrzej Gutowski, vice-president and director of the Sales Department at Ronson Development:
The property market is subject to price changes. However, it is important to remember that the value of real estate is shaped by many factors, and the inflation rate is only one of them. First and foremost, the price of real estate is influenced by the acquisition of land, and currently the lack of available plots of land with proper planning permissions or covered by a local zoning plan causes land prices to rise. Lengthy administrative procedures and obtaining planning permission lengthen the time it takes to bring a development to market. To this must be added a general increase in the cost of investment implementation. All this means that there may be a further increase in property values. However, the rate of increase is expected to be lower than that experienced in recent months and the expected price increase by the end of 2024 will be in single digits.

Mariola Żak, sales and marketing director at Aurec Home:
Prices of new flats are still at record high levels. At present, the price situation in the property market largely depends on the date of introduction of the new housing loan subsidy programme and its conditions. However, it is worth knowing that many different factors influence housing prices, including the level of interest rates, the availability of mortgages, demographics, the migration of both Poles and foreigners and the prices of construction materials.

In 2024, units started in 2022 were on the market, and this was a period when the number of construction starts was almost 20 per cent lower than the 2019-2021 average, resulting in a mismatch between demand and supply. Therefore, further price increases are forecast this year. Experts estimate a nominal increase in housing prices of 10-15 per cent.

Piotr Ludwiński, Sales and Customer Service Director at Archicom:
According to market data, the dynamics of housing price growth in the fourth quarter of 2023 was around 14 per cent compared to the same period a year earlier. This is confirmed by the results of a survey of developers, which shows that price increases from their perspective reached around 15 per cent. Moreover, the industry forecasts that in 2024 the increase will be smaller, but will still remain at double-digit levels. As a result, housing prices are not expected to fall, primarily due to the rising costs of purchasing building materials and land, the availability of which is increasingly limited.

Source: dompress.pl
Photo: Wrocław, Lokum Deweloper