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14 200 flats sold, and 15 500 new flats placed on the market was the result as at the end of Q3 2018 for the markets in the six major cities in Poland, the latest REAS report on the Residential Market in Poland – Q3 2018, has found. The results for the first three quarters of this year, which are worse than in 2017 in terms of both supply and demand, indicate that results at year’s end this year will be down on last year considerably. Experts stress however that the situation in the industry remains stable and does not suggest that there will be a repeat of the events of ten years ago.
If the number of flats sold is used as the main benchmark for the economic climate, then this is a sign that the boom on the residential market has come to an end. Q3 2018 was also the third consecutive quarter in which sales declined, with a decrease of almost 9.9% quarter on quarter (19% year on year) in the number of transactions for all of the six major markets in Poland (Warsaw, Kraków, Wrocław, The Tri-City, Poznań and Łódź). In a period of only 9 months – from the moment the market peaked in Q4 2017, the number of quarterly transactions on these markets fell to 14 200.
The largest decrease, of almost 30%, was recorded in Łódź, where the number of transactions was a “mere” 900. This was all the more distressing for property developers operating on this market because Łódź, which began to make up for losses in relation to the rival cities, overcame the decline in the last few quarters, and Q2 2018 was the city’s best quarter for sales on record. Poznań (-27%) and Wrocław (-20%) saw decreases at almost the same rate. The only market on which there was an improvement in sales in relation to the end of June was the Tri-City (+6.4%).
- These results are primarily to increasing prices – says Katarzyna Kuniewicz, Partner at REAS, and head of the Market Research and Analysis Team. – Even though the rate of increases in the last quarter was no longer that high, the achieved prices for flats on offer were out of reach for many buyers, especially those in the popular segment. This was true in particular because they could not count on any additional financial support for the purchase, such as the recently operated Home for the Young Scheme, for example.
The biggest differences compared to price levels one year ago can be seen in Warsaw (+14.0%) and Wrocław (+13.6%). The increase in Łódź was 9.3%, in Poznań it was 7.1%, and in the Tri-City it was 7.0%. The lowest rate of increase in flat prices year on year was seen in Kraków (+5.2%).
While prices are rising, buyers are not inclined to increase spending to match these rises, research conducted by OBIDO for REAS into buyer preferences shows. Compared to December 2017, the average maximum declared amount for purchases went down in almost all of the groups examined.
REAS experts stress that the current situation will not lead to a repeat of the events of ten years ago. The problems with launching new projects, due mostly to the difficulties property developers encounter in finding land for development and contractors, prevent a supply bubble developing. This is causing flats to continue to sell fast.
- Regardless of the fall in the number of transactions, the time for which flats are on offer before being sold continues to decrease. At this rate of sales, if property developers suddenly stopped placing properties on the market, the flats currently on offer would sell within 8 – 9 months, Katarzyna Kuniewicz says. – For the sake of comparison, in 2012, when the amount of flats on offer was the highest in the market’s history, this time was more than two years. Property developers are still being approached by customers, but the customers are deterred by the price or time spent waiting for a flat, or they have trouble finding something that suits them, because most of the flats in the project that are only just coming onto the market have already been snapped up.
More details on the residential market in main Polish cities you can find in our last "Residential Market in Poland - Q3 2018"