Experts predict that as long as the loans are as cheap as they are today, there will be no decline in home prices. However, they point out that the “price bubble” must eventually burst.
There are more and more questions about future real estate prices in the public space. The big question is when will the so-called price bubble. As noted by Jarosław Sadowski, chief analyst of Expander Advisors, two years ago it seemed that flats are already quite expensive. But they’ve gotten a lot more expensive since then.
The largest increase was recorded in Sosnowiec – by 41 percent. Next on the list are such cities as Radom – 35 percent, Łódź – 29 percent, and Lublin – 27 percent. However, at the end of the list you can notice, among others Bydgoszcz – 12 percent, Poznań – 15 percent, as well as Gdańsk – 17 percent.
– The price increases are due to, inter alia, factors such as – low supply of investment land, costs of building materials or long administrative proceedings. Only from January to July this year, flats in Warsaw increased by as much as 1 thousand. PLN per square meter. Such increases mean a decrease in the availability of this type of real estate for ordinary Kowalski. It is therefore up to the government to reverse the uptrend – comments Patryk Kozierkiewicz from the Polish Association of Developers.
On the other hand, Jarosław Jędrzyński from the RynekPierwotny.pl portal emphasizes that the prices of new apartments in eight major markets in the country have increased on average by nearly 11 percent since the beginning of the year. According to the expert, it is very likely that by the end of the year it will be around 15%, and for selected metropolises – even over 20%. However such a strong growth cannot continue indefinitely because it creates a price bubble and is unbearable for the demand side.
– We are seeing increases in the development market, mainly of small and medium-sized apartments up to 50 sq m. Reservation contracts are supposed to be broken, but I have not experienced it. Some sellers are pushing up bids. It is deceptively similar to the situation in 2007-2008. This will last until it turns out that sellers’ expectations are absolutely unrealistic for the market. People may not be able to cope with it, because the wages of society do not grow proportionally to the sellers’ appetite – says Joanna Lebiedź, an expert of the Polish Real Estate Federation (PFRN).
In turn, Jarosław Sadowski emphasizes that many people can still afford their own “M”, despite the fact that one has to take into account more and more expenses. Recently, the rate of increase in prices on the real estate market is an average of 8-10 percent. per year. But that jump was mitigated by cheap mortgages. They have become the cheapest in history and there is still a lot of interest in them. As the expert predicts, the pace of price growth is likely to slow down to 4-6 percent.
– For all market participants, the best solution would be to slow down the current pace of growth. The first symptoms of this appeared in August, when the boom in the primary market clearly slowed down. By the end of the year, an increase by a further 3-5%. it seems rather doomed. From the beginning of 2022, the market should, however, slow down to a several percent increase per year – adds Jędrzyński.
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As Małgorzata Ostrowska from JW Construction argues, an upward trend is inevitable. The expert sees no chance of stopping it in the near future, let alone falling housing prices. This is mainly due to the more expensive building materials and plots of land, more and more expensive labor, as well as rising inflation. The construction process is lengthening and the investment preparation costs are rising. In addition, there are the announced increases in electricity prices. Contributions to the Development Guarantee Fund are to be added to the pool of costs incurred by developers next year. At the same time, developer margins do not differ, despite high demand.
– In our opinion, there are currently no indications that housing prices will slow down. The importance of, among others record low interest rates. They even encourage Poles to invest their savings in real estate – states the expert of the Polish Association of Developers.
As emphasized by Jarosław Sadowski, there are different opinions as to when interest rates will start to rise. Some argue that it may be this year. But others predict that it will happen in 2023. According to the chief analyst of Expander Advisors, as long as there are no interest rate hikes, housing prices may still rise. This is also due to the fact that we also have a very good situation on the labor market and rising salaries.
– In 2008, when the prices were absolutely exaggerated to astronomical levels, there was a real stagnation in real estate. This concerned apartments, houses and land. Only rentals aroused interest. After four years the situation has changed, but there was a real rebound in 2017. I believe that the increase in real estate prices by 20-30%. in some cases, it may discourage a purchase, says Joanna Lebiedź from PFRN.
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According to Jarosław Jędrzyński, If the price increases do not slow down, we can expect a temporary decline in the number of clients of development sales offices in the next few months. Rising prices in the largest cities will persuade a considerable number of amateurs of their own “M” to look for flats in the periphery of the agglomeration or in towns adjacent to the largest centers.
– If loans become more expensive, the possibility of paying more and more for real estate will be limited. It may also limit the rise in prices, and in the long run even lead to a drop in prices. However, soon a new trend may be an increase in demand for cheaper flats. In the Polish Lada there is an announcement of the program “Apartment without own contribution”, which is to be launched this year – sums up Jarosław Sadowski.
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