Despite a drop in residential sales, the market remains in a state of equilibrium
25 July 2019
Developers still doing well
25 April 2019
Kazimierz Kirejczyk, FRICS
Łódź: the shining star of the development market in 2018
6 February 2019
The housing market in 2018: a thriller with a happy ending
22 January 2019
Summary of 2018 on the primary residential market
31 December 2018
Kazimierz Kirejczyk, FRICS
As many as 18,600 units is the new quarterly sales record of the Polish development sector. In Q1 2017, nearly 30% more units were sold in the six largest Polish cities than in the previous year. The average prices of units on offer remained at the same level, but the latest REAS report entitled “Residential market in Poland - Q1 2017” shows that there was a clear upwards trend in the upper segments of the market.
Once again developers raised the bar. For the second successive quarter, the sales exceeded 18,000 units. Although the quarter-on-quarter increase was not as spectacular as at the end of 2016, the result was still 3% better than the previous record. The demand increased virtually in all the cities under consideration. The only market on which a sharp decline was observed was Tricity (10% on a quarter-on-quarter basis). The companies operating in Kraków are the ones that should be most pleased. In that city, the sales volume was 17% higher than in the preceding quarter and it has exceeded 4,000 units for the first time in the history.
It is worth noting that, for several quarters, the number of ready and unsold units has been decreasing steadily. At the end of March, such units represented only 13% of the entire offer on those six markets, which reached 50,200 units. Moreover, as shown by the monitoring conducted by REAS, buyers have already been found for approx. 3/4 of units in buildings scheduled for completion in 2017. It is not only a sign of high demand, but it also demonstrates good preparation of development projects launched for sale in the last two years. Units match the preferences of buyers not only in terms of their layout or standard but also in terms of price. This is the reward for the developers who have learnt to read the market well. The effect is not only impressive sales results, but also financial security in case of deceleration of the rate of sale in the final phase of project implementation.
Developers reacted cautiously to the possible gentle weakening of the demand caused, among other things, by the effects of Recommendation S (i.e. the increase of the required own equity up to 20%) and the depletion of MdM funds for this year. From January to March, they launched for sale ‘only’ 16,000 units, i.e. 16% less than in the preceding quarter.
Although the MdM boost will be off virtually until the end of this year (in the last quarter, we may expect another increase in the number of reservations aimed to use the second pool of funds for 2018), there are no indications that this deceleration should continue for a longer time. Apart from MdM buyers, there are several equipollent buyer groups, including ‘cash’ buyers, purchasing units for their own purposes, and individual investors, acquiring units for rent. In the opinion of REAS, both groups corresponded to 60% of the entire sales in the last year. The announcement that the interest rates will remain at a very low level should strengthen their activity on the real property market.
Read more: Residential Market in Poland - Q1 2017.