Is there a chance that house prices will fall? Banking analysts have a good feeling

Average transaction prices for apartments in the first half of 2023 will be lower than in the first half of 2022, PKO BP analysts believe. This will be the result of the credit crisis and the ever-decreasing real incomes of the Poles.

House prices have stopped rising in 2022

House prices stopped rising a few months ago. In the fourth quarter of 2022, apartment supply prices were 0.2 percent higher than in the previous quarter. lower compared to the third quarter, according to a report by Otodom and Polityka Insight. Offer prices for small premises less than 40 m2 fell the most (by 1.1% on average) per quarter², which, as noted, may be the result of an oversupply in this segment. The largest decline in supply prices was recorded in medium-sized cities (50-100 thousand inhabitants) - prices there fell by 0.5 percent. q/q

This does not mean that they are not expensive - the price per square meter in large cities still exceeds the average salary. A few weeks ago in another city, this time in Poznań, another barrier was overcome: the average price per square meter exceeded PLN 10,000. zloty. Prices in Łódź are barely PLN 200 below this barrier.

Real wages of Poles are falling

PKO experts, however, see a chance that prices will continue to fall slightly, or at least not rise.. This scenario is possible because loans are still very expensive and low interest. In this situation, developers and sellers of used properties must create financial incentives for those clients who pay in cash or are still able to bear the costs of the loan.

In order to have someone to sell to, they also need to create an offer that meets the capabilities of buyers. Although nominally we are earning more and more, at least in the business sector this is true. The average remuneration in companies exceeded PLN 7,000. PLN gross, but what if the data on average wages provided by the Central Statistical Office cover only half of the employed (they do not apply to employees in the administration or in small companies up to 9 employees), and, in addition, prices rise faster, than salaries? We earn less in real terms and developers cannot ignore this. The authors of the PKO analysis believe that developers can reduce the cost of finished apartments due to the fact that prices for building materials are lower than a year or two ago.

Program “First apartment” - will real estate prices rise?

Analysts also note that in mid-March the Council of Ministers adopted a draft law on state assistance in accumulating funds for housing needs, which introduces the First Apartment program. It provides subsidies from the state budget for installment loans for the first apartment.

According to PKO BP, the new program may further dampen interest in loans, as potential borrowers will refrain from making decisions. On the other hand, after the launch of the program, interest in it may increase demand with a decrease in supply (from the first quarter of 2022 there are fewer apartments commissioned), which, in turn, may lead to an increase in apartment prices.

Development Minister Valdemar Buda, who is responsible for implementing the program, does not agree with the thesis that First Apartment can raise real estate prices.

– About 230,000 sq.m. are built annually in Poland. apartments. The program will take about 30,000, so there will be no price increase. Today there are no buyers for apartments, developers are curtailing construction. If someone says that prices will rise, they do not understand this noise and let them update their knowledge, - he said. on Wednesday in “Sygnały Dnia” minister. “We are concerned that developers will not restrict construction because of a demand problem.