APARTMENT SALES CLOSE TO RECORD LEVELS

APARTMENT SALES CLOSE TO RECORD LEVELS

The developer market has had another very successful year. In Poland’s six biggest cities customers bought in total 65.4 thousand apartments. This result is 0.8% better compared to the year before and only slightly worse than the record-breaking 2017. However, in 2017 the sales were driven by the subsidies under the governmental support program: Mieszkanie dla Młodych (Apartment for the Young). Based on the data from the JLL agency, one should note that in 2019 the last quarter posted great sales. In Warsaw, Kraków, Wrocław, Tri-City, Poznań and Łódź 17.6 thousand apartments were sold, i.e. as much as 9.1% more in year-on-year terms

 

 

 

Apartments are snatched like hot cakes

 

New projects on offer sell very well. Customers bought even more apartments that developers launched to the market. Effects? The supply of new apartments dropped by 1.1% to PLN 50.3 thousand units. Customers were busy especially by the end of last year. Over the past three months of the year they signed purchase agreements for 17.6 thousand apartments. This number corresponded exactly to the number of apartments introduced for sale by developers in this period. This means that practically all apartments were sold out right away. It is noteworthy that the supply in the fourth quarter was as much as 21.2% higher than in the corresponding period of last year. This confirms the continuing huge strength of the demand side of the market. [1]

 

 

Higher prices are no obstacle

 

To confirm that the demand is doing great, one should have a look at the prices. In Warsaw the average price per square meter increased 9% last year and exceeded PLN 10 thousand. Increasing prices in the primary market were seen also in all other key agglomerations. In the Tri-City, the prices will break the PLN 10 thousand per square meter barrier any day now. As we can see, this does not hinder the demand. On the contrary, customers buy even more, being aware that a delay in the decision may hit their wallets. They realize that higher apartment prices have market justification and are driven by the increasing prices of construction materials, investment properties and labor costs.  Is it true that prices are not going to get any cheaper? They may get cheaper, but for now there are no premises for that, and no-one knows how much time it will take. But you need to live somewhere.

 

 

The market environment stimulates purchases

 

On top of that, decisions on fast purchase of an apartment are supported by the continuing low interest rates. At the January meeting the Monetary Policy Council left them on the existing level. As a result, the main reference rate still stands at 1.5%.[2] This enhances the affordability of mortgage loans and increases the group of people who have an opportunity to buy their own property. The investment demand for condohotels, investment apartments and apartments for rent remains very strong. Summing up, one may conclude that now it is a perfect moment to buy an apartment, both for one’s own needs and for investment. Especially because investing in properties for rent is still a safe and, at the same time, one of the most profitable forms of using your capital.

 

 

[1] JLL Report “Rynek mieszkaniowy w Polsce 4Q 2019” [Housing Market in Poland, 4Q 2019].

 

[2] https://www.nbp.pl/polityka_pieniezna/dokumenty/files/rpp_2020_01_08.pdf

 

 

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