Dom Development: Housing prices will not be so rapid, but it will continue
Housing prices have a further growth potential, but it should not be as violent as before in 2023, assesses the President of Dom Development Jarosław Szanajca.
“This increase in prices that we have had and are facing over 2023 is an increase too high for a stable market. It can be said that it pleases us, because the increase in prices translates into a margin, while looking at the market in the long term, this growth is too high. He should be stable, quite slow and then it is easier to plan his future in this market. And here some indications [to slow down price growth] are, first of all, they will come with the upcoming supply," said Szanajec.
He said that many developers will unlock “parked” projects due to the increase in prices due to their potential profitability.
"Prices have increased, these projects are slowly moving and I think that supply will come a little and this price increase should already be normalized at slightly lower, less nervous levels, [...] which is generally good for the market," he emphasized.
“In addition, it does not appear that the 2% Credit which had a share in this growth does not seem to have a bright future in it, or turned into further programs. I think that over the course of 2024 he will break and this will also cool the appetites for a sharp purchase," continued the president.
This does not mean, according to him, that housing prices will fall.
"At all about the price levels, we think they still have growth potential with such a healthy, normal demand, so large that we are able to expect a gradual, not too fast, but increase, but of price growth," Szanajec concluded.
In a commentary on the results for Q3, the Management Board indicated that it expects to maintain a strong demand for housing in the near future. In recent months, it has been strengthened by launching a "Safe Loan 2%" program and interest rate cuts.
"Therefore, we are gradually complementing our offer, the basis of which are apartments of an increased standard. Investments in this type of real estate are perceived as capital protection in conditions of still high inflation and negative real interest rates on deposits. Although the percentage of loan-financed housing increased again in the third quarter, in our case still more than half of the sales are cash transactions, which is a confirmation of the continuing high level of investment purchases," said Szanajca.
In the third quarter of this year, cash transactions accounted for 51% of the new sales of Dom Development Group, compared to 54% in the second quarter and 60% in the first quarter of this year. The continued high demand translated into a further increase in housing prices. In Dom Development Group, the average value of the transaction (including the price of the apartment with a possible finish, storage room and parking space) in the third quarter of 2023 amounted to PLN 727 thousand and was 10% higher y/y.
Source: Dom Development and ISBnews