INPON index: Polish residential real estate market slightly chilled

INPON index: Real estate market slightly chilled, but still in a good mood - survey of intermediaries' sentiment after Q3

The sale of plots of land, houses and flats in the fourth quarter will be at a high level and has the potential for further development. The situation is still the worst in the market of commercial premises - it results from the first in Poland survey of the mood of intermediaries, carried out by the Nieruchomości-online.pl portal. The premiere of the Real Estate Brokers' Sentiment Index took place on October 26. The project partner is the University of Economics in Wrocław.

The property experts in Nieruchomości-online.pl published a detailed report summarizing the sentiment survey in the real estate sector after the third quarter of 2021. The survey was conducted as part of the Real Estate Agents' Mood Index (INPON), the first research project in Poland aimed at analyzing the market situation every quarter from the perspective of real estate companies and agents.

INPON is a barometer of the atmosphere on the market and can take values ​​from 0 to 100 points, where a result above 50 means that intermediaries positively assess the situation and, in their opinion, there will be an improvement. The index is implemented in cooperation with the University of Economics in Wrocław, which was responsible for developing the research method and the index algorithm.


Home sales are down but still high:
Over 700 brokers participated in the September survey of Nieruchomości-online.pl. The main market segments were analyzed, i.e. apartments, houses, plots of land and commercial real estate in terms of the level of prices, demand and supply.

"In the third quarter, the sentiment index reached 61.30 points. In the opinion of professionals, the real estate market will continue to develop, as it is indicated by the value above 50. It also means that the trend from Q2, in which the mood was slightly better (62.75 points), was maintained. The slight weakening resulted from the socio-economic conditions that we dealt with in the third quarter, incl. economic situation, the situation in the banking sector and changes in the real estate market environment," says Assoc. Bogusław Półtorak, prof. UEW.

Among the 8 sub-indices comprising INPON, the sale of plots was the highest (67.3 points). However, this result is lower by almost 8 points. compared to the second quarter. Despite the soaring prices, Poles continued their purchases, most often investing in land, although due to the time of the year the demand slowed down slightly. Positive sentiment of intermediaries was also observed in the case of larger apartments for sale (67.2 points, a decrease by more than 2 points) and studios for sale (66.5 points, a decrease by 1 point).

"A drop in the value of the sub-index was also recorded in the segment of home sales, although this value is still relatively high (65.3 points). The decrease in interest may be related to the anticipation of the announced simplifications in the field of consent to build a house," explains Dr. Alicja Zakrzewska-Półtorak, prof. UEW and director of the Research and Development Center of the Local Government of the UEW.

The survey questions prepared by Nieruchomości-online.pl and the university concerned also financing. The intermediaries' observations show that in the last year there has been a large or moderate increase in the share of cash purchases in the plots and apartments segments. The largest share of cash transactions was in the case of land.

Leasing slightly up, and commercial premises still down:
In the opinion of intermediaries, the lease segment is doing slightly better than in the second quarter. The value of the sub-index for larger apartments was 59.5 points. and increased by over 2 points. On the other hand, the rental of studios reached 60 points, gaining 1.5 points quarter to quarter. The increase in interest in renting, however, is characteristic of the third quarter, as it is related to the return to full-time education and work.

"Intermediaries are quite optimistic about the situation on the market, which is influenced by the high level of demand, albeit with a noticeable cooling. However, positive ratings do not apply to every segment. The pandemic continues to negatively affect the commercial property market. The assessment of the situation is still pessimistic, as evidenced by the value of the index below 50 points. However, compared to the second quarter, the value of the sub-index for office premises for sale and lease increased (by over 1 point). This was related to the relative stabilization of the pandemic situation. The value of the sub-index for commercial premises for sale and lease remained unchanged," says Alicja Palińska from the analysis department of Nieruchomości-online.pl.

Forecasts of intermediaries for the fourth quarter:
Real estate agents point to a further increase in real estate prices due to increases in the prices of services and building materials. A positive aspect is that the increases in plots and houses should not be as severe as in the third quarter. Therefore, the sale of plots, houses and flats in the fourth quarter will be, in their opinion, still at a high level and has the potential for further development. This may translate into greater popularity of the lease, as well as the search for alternatives to new ones flats in the form of large panel flats or houses in cheaper locations.

"Rising labor and material costs will affect the purchase of apartments for renovation. The same goes for building houses. The majority of customers will choose finished apartments and houses from the secondary market, rather than build from scratch. With rising heating and energy costs, cost-effective and easy-to-maintain solutions will be very popular. Prices of plots up to 15 km from the agglomeration will gradually increase. However, a large part of them will not be allocated for construction, but will be an investment of capital," believes Piotr Szarkowski from the Północ Nieruchomości agency in Białystok.

Real estate companies and agents also emphasize that the supply will still not keep up with the demand. A change may be brought about by another interest rate hike by the MPC, the first scene of which we had at the beginning of October. However, with interest rates still low and high inflation, the middlemen do not expect an increase in the supply of offers for sale (largely counting on maintaining the current activity of sellers).