2013 Residential market report for Poland: sharp price falls, more transactions, huge impact of new regulatory initiatives

Information based on actual 2012 transaction data collected by brokers associated in the Polish Real Estate Federation (PREF) in the largest Polish cities indicates that Poles can afford increasingly smaller units, time of exposure on the market is getting longer. AMRON reports significant changes on the housing market and price falls of 5 to 10%, which resulted from lack of economic growth as well as the adjustment processes related to restrictive regulation in the building sector and support programmes to young families. According to REAS, the Family Own Home Programme considerably raised young buyers’ interest in purchase of small and inexpensive dwellings but also encouraged developers to expand their offer of dwellings meeting the program’s price limit requirements.

If the number of delivered construction permits decreased by 10% over the last twelve months, the number of completed housing units did not. The very new Act on protecting rights of single family house purchasers (Developers Act), convinced developers to launch new projects before the regulation entered into force. 

Third quarter of 2012 saw an increase of almost 30% of new dwellings on the six largest markets compared to quarter three of 2011. As a result, demand increased and effective transactions raised by 18% during the last quarter of the year. Over a twelve months period, transactions increased by 3%. The "Family on its own" programme which subsidized interest on mortgage loans, added to this trend.

The main factor negatively affecting demand was uncertainty on the labour market and the declining rate of the nominal average wage growth. Moreover, creditworthiness of Polish borrowers declined as a direct consequence of restricted credit policies and high interest rates. 

Therefore, average transaction prices of residential units continued to fall, although unevenly. Average price falls can be estimated 5 to 10%. 

2013 will be challenging. Market developments will depend on factors such as the banks motgage policies, the impact of new regulatory initiatives such as the " Flat for Youth" programme, the level of supply, the real impact of economic slowdown on the purchasing power, the inflation rate.

Click here to read the PREF, AMRON and REAS reports.