Recent comments

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Katarzyna Kuniewicz

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Kazimierz Kirejczyk, FRICS

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Kazimierz Kirejczyk, FRICS

Record-breaking quarter at the end of the record-breaking year

18 January 2017

18,100 dwellings were sold in the six largest markets (Warsaw, Kraków, Wrocław, the Tri-City, Poznań and Łódź) in the last quarter of 2016, up by 25% quarter on quarter. In accordance with the latest “Residential Market in Poland – Q4 2016” report, the number of transactions reached 62,000 units in the entire year, beating last year’s record. REAS experts estimate that the value of the transactions is PLN 24.5bn.

Although not in all of the cities analysed by REAS the increase in sales was as spectacular as in Wrocław (28% y/y), Warsaw (26% y/y) or the Tri-City (26% y/y), we see a clear market phenomenon. The increasing demand was being satisfied on an ongoing basis by developers, which in the past 12 months released over 65,000 units onto the market (nearly 19,000 in Q4 alone).

The increase in sales by over 20% recorded by developers in the previous year was possible thanks to the particularly high activity on the part of the two major groups of customers: young buyers of their first flats receiving high subsidies under the Home for the Young scheme and private investors pulling funds out of low-yield bank deposits and purchasing small flats for rental instead,” said Kazimierz Kirejczyk, President of the Board at REAS. “We have also seen a major increase in the activity of buyers who are looking to improve their standard of living, which may indicate a generational shift on the market.

This is important because it has been announced that in the coming years the real significance of schemes supporting the development market will decrease. Although formally the Home for the Young is scheduled to expire in 2018, in accordance with the BGK data the 2017 funds have just been exhausted and there is slightly more than a half left of the first tranche for 2018. It is important to remember that the share of flats sold with government subsidy reached up to 25% in the previous quarters.

 “The willingness to receive a subsidy under the Home for the Young [Mieszkanie dla Młodych] scheme and the fear of having to compete against other buyers were no doubt a major incentive to make a purchase in the past quarter. At least a few thousand flats reserved [1] or sold between October and December 2016 were purchased to receive a subsidy under the Home for the Young scheme from the funds made available since January 2017. It’s not the first case in the history of the Home for the Young scheme that we are seeing a shift in demand from the future, i.e. acceleration of the decision to make a purchase, which otherwise would be made in the coming months or years,” explains Kazimierz Kirejczyk, President of the Board at REAS.


The anticipated loss of significance of the scheme has already been somewhat reflected in the increase of the average prices of units released onto the market. The developers have started significantly fewer projects that meet the requirements of the scheme and have focused on adding units that meet the expectations of the other two groups of buyers to their offer. This resulted in a 6% increase in asking prices compared to late December 2015.

It seems natural that the developers expect the prices to rise in view of the increasing demand. However, there are several factors that may bring a slowdown in the coming quarters. The forecast increase in interest rates, which will drive down the credit capacity of the developers’ customers and make investing in flats for rental less attractive, will bring a gradual decrease in demand from the two most important groups of customers buying homes from developers. On the other hand, the assumptions of the new Home PLUS [Mieszkanie Plus] scheme will shift the focus to rental, which may to a certain extent influence the decisions made by people buying flats as investments. These properties could have represented 30% of all sales in 2016, as estimated by REAS.

The sales in 2017 will be mainly driven by the behaviour of customers buying homes for cash, as primary residence or as investments. Both groups will probably continue to be very active on the market, while sales will be only slightly lower than in 2016. The drop in demand from private buyers should be partly offset in the coming two years by purchases made by institutional investors,” comments Kazimierz Kirejczyk.

More details on residential markets of Warsaw, Krakow, Wrocław, Tri-City, Poznan and Łodz you can find in "Residential market in Poland - Q3 2016"report.

[1] In accordance with REAS methodology, the group of sold units also includes dwellings withdrawn from the offer following a paid reservation.