Archives: Badania i publikacje AMRON

Nowadays, both citizens and state authorities are increasingly paying attention to the ecological aspects of their activities and attempting to reduce the negative impact of urbanization on the natural environment. One of the disadvantageous phenomena that we as a society have an impact on is the deterioration of air quality. It is mostly caused by the use of outdated heat sources as a method of heating buildings. Pollution from heating sources goes directly to people’s areas and can cause contamination concentrations at a level dangerous for health. The biggest emission of pollution is observed during the heating season, when each of us use some source of heating in our houses. The problem intensifies in large cities, where we are dealing with the high intensity of buildings and according to this, with many heat sources causing emissions. Kraków is the leading example of the city that deals with very bad air quality. However, the problem is also not bypassed by suburbs with lower intensity or small towns. Those areas are very often build-up with old buildings, where simple heating sources were installed, causing the highest air pollution in the heating season. First step to improve the air quality in Poland is to identify heat sources occurring in our country. Then it is possible to introduce appropriate mechanisms to facilitate the modernization of outdated installations. For this purpose, in accordance with the Act of 28 October 2020 amending the Act on supporting thermomodernisation and renovation and some other acts (Journal of Laws item 2127), the Central Construction Supervision Office (pol. Główny Urząd Nadzoru Budowlanego) created the Central Register of Buildings Emission (pol. Centralna Ewidencja Emisyjności Budynków).

What is The Central Register of Buildings Emission?

The Central Register of Buildings Emission is a system kept by the Central Construction Supervision Office, which contains comprehensive information about the sources of building heating in Poland. The launch of the database took place on July 1, 2021. Its main goal is to improve air quality by fighting smog and to help in the process of exchanging outdated heating sources. Creation of the system had a direct impact on inhabitants of Poland, because it is mandatory to submit a declaration into the system by each owner or manager of a residential or non-residential building, in which there is any heat source with a power not exceeding 1MW. For facilities, where the sources of heat and fuel burning were launched before July 1, 2021, the declaration had to be submitted mandatory by June 30, 2022. In case of new heat sources (launched after July 1, 2021), the declaration should be submitted within 14 days from the date of its launch. It can be submitted in two ways: electronically or in paper form at the Commune/City Office. It is important that if the declaration is not submitted within the time limit, a fine may be imposed on the owner of the property or building manager. Failure to submit a declaration is also associated with the loss of the possibility to receive ‘coal additives’ (financial support) od add-ons to other heat sources.

Data collected in The Central Register of Buildings Emission – what is it showing us so far?

The Central Construction Supervision Office specifies that as for February 9, 2023 the database included 9 320 406 declarations. According to Central Statistical Office data, at the end of 2020 there were over 15 million apartments in Poland and over 6 million single-family houses, and in 2021 almost 235 000 new houses and apartments were put into use. Therefore, it can be estimated that the system should contain over 20 million declarations. This means that about half of the data has been entered so far. The graphic below presents the increase of data in the system from its launch.

PICTURE 1. NUMBER OF DECLARATIONS SUBMITTED INTO THE CENTRAL REGISTER OF BUILDINGS EMISSION FROM JULY 2021 TO FEBRUARY 2023

source: https://www.gunb.gov.pl/strona/statystyki (access: 09.02.2023 r.)

Only 667 878 declarations were introduced by the end of 2021. The largest increase of data in the system was observed between May and June 2022. Certainly, it is the result of the deadline for introducing the declarations for heat sources that have been launched before July 1, 2021 (the deadline was June 30, 2022). That occasion almost doubled the data in the system. In 2022, a total of over 8,5 million data was introduced to the database.

On the basis of the data entered so far, it is possible to carry out a fairly wide analysis of the structure of heat sources due to their type. The following structure results from the collected data.

PICTURE 2. THE STRUCTURE OF HEAT SOURCES IN POLAND DUE TO THEIR TYPE

source: own study based on https://www.gunb.gov.pl/strona/statystyki (access: 09.02.2023 r.)

It is estimated that over 1/3 of heat sources in Poland are solid fuel boilers. Gas heating is also quite popular. Modern heating sources, such as a heat pump, are still treated as an innovative solution, requiring a lot of financial effort and specialist knowledge. Therefore, they are still not very popular (they constitute less than 5% of all heat sources currently used in the country). The current pro-ecological trends and the search for savings in a wider time horizon, prompts an increasing number of people to install heat pumps in their houses. The use of this heat source requires a lot of investment at the first stage of the installation, but later operating costs are much lower (especially with additional use of photovoltaic panels).

The Central Register of Buildings Emission – and what’s next?

The main goal emerging on the structure of heat sources in Poland is to replace outdated heat sources (i.e. all coal or wood boilers, which do not meet the requirements of at least class 3). Voivodeship authorities in Poland are currently introducing anti-smog acts. They specify the deadline that such installations must be replaced with other, less invasive for the environment. After this date, the use of such outdated heat sources will be prohibited and may result in the imposition of a fine. The graphic below presents the deadlines for each voivodships to replace outdated installations (the names of the voivodships are in polish).

source: https://vosti.pl/pompy-ciepla/do-kiedy-musisz-wymienic-kopciucha-poznaj-terminy-dla-swojego-wojewodztwa/ (access: 13.03.2023 r.)

In order to speed up the furnace replacement process, local governments offer subsidies for residents. A popular support programme for citizens regarding the exchange of heating sources is the “Clean Air” (pol. “Czyste powietrze”) program implemented by the National Fund for Environmental Protection and Water Management (pol. Narodowy Fundusz Ochrony Środowiska i Gospodarki Wodnej). Many local governments at lower levels are also conducting information campaigns for the local community and offer their own financial support tools for their residents.

Over 30% of all heating sources in Poland are solid fuel boilers. Certainly many of them are devices with a class 3 or worse. The replacement of these installations with more innovative and “clean” can largely reduce smog in low emission areas. In 2025, in most Polish voivodships it will no longer be possible to use this type of installations, so then we should expect the largest, positive change in the quality of our air.

The universality and comprehensiveness of The Central Register of Buildings Emission is to positively affect the efficiency of low-emission policy management by municipalities. Based on the data collected in the system, local governments are able to obtain a number of facilitations in the grant obtaining process. In 2023, The Central Construction Supervision Office plans to implement new tools for users of heat sources, such as the possibility of ordering chimneys sweep reviews or inventory of buildings. It will also be possible to check the possibility to obtain a financial support for real estate thermomodernisation. The system will contain a list of applicable support programmes for this kind of operations.

Barbara Mariańska
Maintenance and Development Specialist

According to InfoMonitor S.A. Economic Information Bureau, high bills for electricity, gas and water are the most burdensome expenses for Poles. Other problematic expenses are those related to the purchase of fuel, food, heating fuels, and expenses for rent or loan instalments. At the end of October 2022, the total value of consumer debt was nearly PLN 77.4 billion, and almost 2.7 million people already had a problem with paying their current obligations.

Housing fees are monthly expenses that have been steadily increasing in recent times, putting more and more burden the household budget. Therefore, the government has prepared various types of housing subsidies for Poles. In addition to the government’s ‘Flat for Start’ Programme, the Borrower Support Fund, the Rental Housing Fund, and the ‘Flat Plus’ Programme, an interesting form of subsidizing the cost of maintaining an apartment or a house is the housing allowance.

The housing allowance is regulated by the Act of June 21, 2001 on housing allowances (Journal of Laws 2001 No. 71, item 734) and is granted to:

• tenants or sub-tenants of residential premises, residing in these premises,
• persons living in residential units to which they have a cooperative right to dwelling,
• persons living in residential units located in buildings they own and owners of independent residential premises,
• other persons with legal title to the occupied dwelling and incurring expenses related to its occupation,
• persons occupying a dwelling without a legal title, waiting for a replacement dwelling to which they are entitled or a social rental of the premises.

One of the eligibility criteria is the amount of family income. For this purpose, the average monthly income per member of the applicant’s household is determined. This income is calculated on the basis of the household’s incomes from three months preceding the date of application and then related to the average salary in the national economy as for the date of the application. The condition is considered fulfilled, when that relation does not exceed 40% in a one-person household and 30% in a multi-person household. According to the Statement of the President of the Central Statistical Office of February 9, 2022, the average salary in the national economy in 2021 amounted to PLN 5 662.53. Thus, the above-mentioned income criterion is PLN 2 265.01 for a one-person household and PLN 1 698.76 for a multi-person household.

Income – after deducting the amounts of alimony paid to other people – are revenues minus deductible costs, income tax charges, social security contributions not included in revenue costs and health insurance contributions.

If the amount of calculated income per household member is higher than the above amounts, and the amount of the surplus does not exceed the amount of the housing allowance, then the due housing allowance is reduced by this amount. Moreover, if the amount of the housing allowance would be less than 0.5% of the amount of the average salary in the national economy (that is, currently less than PLN 28.31), this subsidy is not granted. It is also worth noting that the municipal council, by resolution, may increase the percentages of the average salary in the national economy.

The usable area of the premises is another important condition for obtaining a housing allowance. Subsidies can be received if the area is not higher than 30% of the legal normative area, which is:

• 35 square meters for a 1-person household,
• 40 square meters for a 2-person household,
• 45 square meters for a 3-person household,
• 55 square meters for a 4-person household,
• 65 square meters for a 5-person household,
• 70 square meters for a 6-person household.

The Act allows a larger apartment size in two cases:

if there are more than six people living in a household, then each additional person increases the normative area of that apartment by 5 square meters,

if a disabled person lives in the apartment, then the normative area is increased by 15 square meters (regardless of the number of household members).

The larger area of the premises does not automatically eliminate the possibility of applying for a housing allowance. In fact, the Act allows for a situation that the area of the premises exceeds the standard by no more than 30% or even by no more than 50% in case when the share of room and kitchen area in the usable area of the apartment does not exceed 60%. The housing allowance is then reduced accordingly. It is charged only on the normative area, while meters above the norm are paid normally.

The table below presents information about the area of the apartment, for which the housing allowance is available, depending on the number of household members.

TABLE 1. APARTMENT AREA VS. NUMBER OF HOUSEHOLD MEMBERS

Number of household members	Normative area	Exceeding the normative area by 30%	Exceeding the normative area by 50%
1 person	35 sqm	45.50 sqm	52.50 sqm
2 persons	40 sqm	52.00 sqm	60.00 sqm
3 persons	45 sqm	58.50 sqm	67.50 sqm
4 persons	55 sqm	71.50 sqm	82.50 sqm
5 persons	65 sqm	84.50 sqm	97.50 sqm
6 persons	70 sqm	91.00 sqm	105.00 sqm

source: own study

The municipal council may increase the maximum normative area or the maximum permissible degree of exceeding the normative area.

The amount of granted housing allowance depends on the amount of housing expenses, which include, among others, rent rate, operating costs, common property management costs (renovation fund) and fees for heat, water, sewage, garbage collection. However, expenses do not include, for example, those incurred for insurance, property tax, gas or electricity charges.

The amount of the housing allowance is the difference between the above-described housing expenses, corresponding to the normative area of the occupied premises, and the amount of expenses incurred by the applicant in the amount of:

• 15% of household income – in a 1-person household,
• 12% of household income – in a 2-4-person household,
• 10% of household income – in households of 5 persons and more.

The amount of the housing allowance may not exceed 70% of the expenses attributable to the normative area of the occupied apartment, or 70% of the actual expenses incurred for the dwelling if the area of the dwelling is lower than or equal to the normative area. However, the municipal council may increase or decrease their share by 20 percentage points.

The housing allowance is granted for six months. Typically, the funding is not received in cash or on a personal bank account of the beneficiary, because the subsidy is transferred on the bank account of the property manager and reduces the amount of the due payment for the premises. The exceptions are the owners of single-family houses who receive subsidies directly.

The average allowance in 2021 was PLN 247.80. In recent years, the number of housing allowances paid has been systematically decreasing. In 2015 it was almost 4.4 million, while in 2021 only 2.5 million. By 2020, this has translated into a constantly declining total amount of allowances paid, which in 2015 amounted to almost PLN 900 million and in 2020 to just over PLN 580 million. In 2021, the amount of housing allowances paid out was over PLN 615 million. The situation described above is reflected in the graphs below.

GRAPH 1. NUMBER OF HOUSING ALLOWANCES PAID (MILLION) IN THE YEARS 2015 – 2021

source: own study based on CSO data

GRAPH 2. AMOUNT OF HOUSING ALLOWANCES PAID (PLN MILLION) IN THE YEARS 2015 – 2021

source: own study based on CSO data

People in a difficult financial situation who have problems with paying for a flat should remember about many possibilities of financial support offered by the authorities, including housing allowance.

Monika Kubisz
AMRON System Coordinator

Last Recommendation J draft amendments concerning the policy of data gathering and processing on the real estate market include PHI certificate provision. Banks will be obliged to collect information on buildings being certified. According to the reference, it will have a crucial impact on property value. This certificate validates that all passive building standards are achieved.

Passive buildings come under sustainable buildings, which make a distinction between energy-efficient buildings, passive buildings, and zero-energy buildings. These building types vary in terms of energy demand (zero-energy buildings are completely self-sufficient), the minimal thickness of thermal insulation, type of ventilation, and heat source. In buildings that have to meet the highest requirements – passive and zero-energy buildings – mechanical ventilation with heating recovery is used. The most important feature of these buildings is that their heat mainly stays inside and does not have to be provided actively. For instance, the passive residential building needs 1/8 energy for heating in comparison to the average house. This value equals no more than 15 kWh/sqm per year. Energy is obtained from renewable sources mostly. Passive building constantly maintains an optimal temperature because of good thermal insulation. Only to a minimal extent, it loses heat that is generated from solar energy and heat produced inside the building by people, animals, and installed household appliances and electronics, etc. In cold locations during the winter season, simple heating systems are suitable to provide comfortable conditions. As stated by the Passive House Institute, annual heating fuel consumption in a passive house of average space located in Poland equals to about three full refuellings of an average car. Passive building standards are achievable in almost every climate condition. However, too much shade in conjunction with a cold environment that does not allow to draw solar power can be the biggest barrier.

PHI CERTIFICATE – Passive House, EnerPHit and PHI Low Energy Building

PHI certificate is a document confirming an investment’s compliance with passive building principles. Certification criteria are developed by The Passive House Institute (PHI) in Darmstadt (Germany). PHI appoints in other countries accreditation units, that are authorised to grant the certificate in accordance with the procedure based on criteria. In Poland, the only established unit is Polski Instytut Budownictwa Pasywnego i Energii Odnawialnej im. Güntera Schlagowskiego (PIBPiEO).

PHI certification includes residential buildings as well as non-residential buildings. Not only houses, but also sports halls, schools, office buildings and industrial properties often achieve passive building requirements.

Receiving a certificate can also be possible after modernization of the existing buildings. Nevertheless, it is more difficult than constructing a passive building from the ground up, when the investor has influence for all materials and technologies applied and possible mistakes can be removed at the design stage by specialised certificatory.

There are three basic requirements that the building has to meet to gain the Passive House Certificate. The first one relates to the annual energy demand indicator for heating, which may not exceed 15kWh/sqm or heating power equivalent to a maximum of 10 W/sqm. Moreover, the annual primary energy demand indicator may not exceed 120 kWh/ sqm for all the energy needs. Another demand concerns air infiltration by leaks of building envelopes, so-called uncontrolled air leakage. In a passive building, the air infiltration has to be less than 0.6 h-1 of the whole building volume per hour, which means that for the pressure difference equal to 50 Pa the infiltration has to be lower than 0.6 volume of the building per hour.

Other quality requirements are, among others, appropriate ventilation efficiency providing air quality compatible with standard DIN 1946, which guarantees consistent draught in every room and does not allow the temperature to drop below 17 degrees. The noise level within the ventilation system has to be below 25 dBA. Every room should have an opening that allows the inflow of air from the outside to get additional cooling during hot days.

PHI Certification concerning newly built passive constructions is a Passive House Certificate. It is worth underlining that this certificate is designed for all types of building, not only for house buildings. There is also a possibility to get so-called EnerPHit Certificate designed for modernised existing buildings. During certification, a building is classified as a class ‘Classic’, ‘Plus’ or ‘Premium’. The class is based on building’s renewable energy generation. Besides, highly energy-efficient buildings that do not qualify for the achievement of passive building standard, may obtain PHI Low Energy Building certificate.

Detailed criteria for Passive House, EnerPHit i PHI Low Energy Building are available on the PHI website (passiv.de), under CertificationBuildingsEnergy Standards Criteria.

The Passive House Institute verifies meeting the standards using the Passive House Planning Package (PHPP). At the moment this tool is available in over 20 language versions and used by architects, designers, and verifiers in many parts of the world.

CONSTRUCTION METHODS, MATERIALS AND TECHNOLOGIES

The passive building should have a simple, compact structure with possibly minimal number of architectural forms protruding from the facade (bay windows, balconies etc.). The aspect ratio A/V that determines the ratio of the area of partitions to the volume of the building should be in the range of 0.75 – 1.2.

The passive building should be characterized by appropriate building materials that provide good thermal insulation. Walls and roofs are insulated with the material of the highest thermal parameters. Very good insulation applied across the entire building shell protects against both cold and overheating in the summer. In the spring and summer season, additional sun protection is required, such as external blinds.

Passive houses can be constructed in various technologies, e.g. brick, reinforced concrete, wooden, prefabricated, and mixed construction technologies. However, the thermal properties of structural elements are very important. Heat transfer coefficient (U) is used to describe these properties. U-coefficient determines the amount of heat per sqm at a temperature difference of 1 Kelvin which passes through the structural component. The smaller the value of this coefficient, the lower the heat loss of the element. In a passive house, the U-coefficient should be close to 0.1 W / (sqmK). Precisely, the U-coefficient of a non-transparent building shell has to be below 0.15 W / (sqmK), and the U-coefficient of windows and other transparent elements has to be below 0.8 W / (sqmK).

The construction project should take into account of the problem associated with shading. Since the passive building is characterized by the possibility of passive solar energy use, the side of the building with the southern orientation should acquire as much heat as possible from the sun in the heating season.

Nevertheless, it would be impossible to construct a passive house without using modern technologies. One of the advanced building methods used in passive construction is recuperation. It is mechanical ventilation with heating recovery from exhaust air. Recuperation ensures supplying the home with fresh air with higher oxygenation, preventing heat loss at the same time. Because of this ventilation system, frequent opening of windows is unnecessary.

Another technology used in passive buildings is a heat pump. This device is very energy-efficient because it does not produce heat energy, but transfers thermal energy from the outside using a refrigeration cycle. Warm water is prepared by using a heat pump or solar collectors.

Interesting issue is possibility of ventilation of the building without any significant heat loss. The tubular ground heat exchanger (tube GHE) is used to supply fresh air in passive buildings. By exchanging heat with the ground, the exchanger pre-heats the fresh air to a temperature above 5 degrees. The air heats up to this temperature even in the winter season. In the next step, using an air-to-air heat exchanger, it occurs an effective recovery of heat from exhaust air. Most of the heat in the removed air is mixed with the incoming fresh air, so that the heat recovery efficiency in passive buildings is above 80%.

It is worth knowing that it is relatively easy to find out whether a given building material or other product can be used in the construction of a passive property because The Passive House Institute in Darmstadt also certifies components.

Another element, which should be characterized by a passive building, is energy-efficient equipment. Equipment such as a ventilation unit with a power consumption of less than 0.45 W/m3 is required. In addition, household appliances must have the highest possible energy class (preferably A to A++ class).

CERTIFICATION PROCESS

There are several steps in the procedure for certification of passive buildings according to PHI standards. The first step is to verify the architectural design. The investor provides documentation to the authorized institution (in Poland it is the PIBPiEO), which confirms the completeness of the documents and the correctness of the calculations performed. If at this stage it is detected that the building does not meet all the standards, it is still possible to change the design. After adjusting the design to the requirements the investor can start construction works.

The second step is to conduct two leakproof tests, so-called Blower Door Test. The tests have to be performed in accordance with the standard PN-EN 13829. The PIBPiEO or any other entity can conduct them, provided that it is not involved with the investor or contractor. The first test is conducted in raw state. After finishing work the second test is conducted.

The final stage of the certification takes place after the successful completion of the Blower Door Test. The investor is bound to deliver, among others, construction design, installation diagrams, Blower Door Test data, and documentation of construction works to the PIBPiEO. If the final verification is completed, the certificate is issued.

BENEFITS OF THE PROPERTY WITH PHI CERTIFICATE

The PHI certificate gives the investor a guarantee that the building was designed and made by passive building standards. Although passive buildings are average 5-10% more expensive in construction, it is affordable to build them, due to maximally low operating costs. As long as the building is operated, it is economized for so long.

In addition to the economic value, the health benefits of staying in a passive building are important. The passive house provides residents with high thermal comfort and good indoor air quality all year round.

It should also be pointed out the invaluable environmental benefit. At this era of the energy crisis and times when buildings are responsible for about 1/3 of the total energy consumption in the world, passive construction becomes an attractive alternative.

DEVELOPMENT OF THE IDEA OF PASSIVE CONSTRUCTION

The idea of passive construction is the most popular mainly in Germany, Austria, France, and the United Kingdom. In Poland, there are currently 12 buildings with PHI certificates. In our country, the first certificated building is a detached house built in 2007 in Smolec nearby Wroclaw. The first non-residential certified building is a sports hall (Lesser Poland Voivodeship) built in 2011.

Current data on passive buildings is published in the database of the Institute of Passive Construction in Darmstadt, at the Internet address: passivehouse-database.org. In addition, open data related to all PHI-certified buildings in the world are presented in the map, available on the Institute’s website (passiv.de), under CertificationBuildingsWorld map of certified buildings. You can also find the map at database.passivehouse.com/pl/buildings/map/.

Weronika Przypaśniak
Junior Specialist in Research and Market Service

In mid-December last year, the Ministry of Economic Development and Technology announced the preparation of a new, comprehensive programme of support for people who want to buy their first flat. This programme will consist of two solutions, the first of which is addressed to people who are planning to buy an apartment now, the second to those who are planning to do so, but in a few years’ time.

Safe Mortgage Loan 2% is one of the two components of the First Flat Programme. It will be a preferential loan granted at a guaranteed fixed interest rate of 2% (plus other credit costs such as margin), which means an interest rate 3-4 times lower than the current offerings of commercial banks. This solution is intended to help in improving creditworthiness. The recommendation of the Polish Financial Supervision Authority, which has been in force since April last year, that obliges banks to accept a minimum change in the interest rate level by 5 pp in the process of assessing creditworthiness, has significantly reduced the creditworthiness of many people. In fact, this safety rule has resulted in many people not achieving creditworthiness with such an increased interest rate ceiling. As a result of the above recommendation, as well as the increase in interest rates by the Monetary Policy Council of the National Bank of Poland and rapidly rising real estate prices, the number of newly granted loans has fallen more than threefold over the past year – from 68 353 mortgage loans amounting to PLN 23.229 billion in Q3 2021 to 21 218 mortgage loans amounting to PLN 7.007 billion in Q3 2022. The new housing programme is expected to change the trend on the market.

CHART 1. NUMBER AND VALUE OF NEW HOUSING LOANS GRANTED QUARTERLY

source: self-study based on the SARFiN System data

The Ministry of Economic Development and Technology has announced changes to Recommendation S regarding the calculation of creditworthiness at fixed interest rate. For fixed-rate loans that are part of the First Flat Programme, the PFSA will reduce the interest rate level change buffer from 5% to 2.5%, i.e. prior to the entry into force of the current recommendations.

Safe Mortgage Loan 2% may be offered by all commercial banks that sign an agreement with Bank Gospodarstwa Krajowego. Loans that will be eligible for the programme have to present a market proposal for the cost of the loan, including both the interest amount, as well as the single instalment amount. The government will finance part of the loan instalment, which is the interest rate difference of more than 2% through Bank Gospodarstwa Krajowego. Thus, the cost to the client will be the loan interest rate of 2%, the margin, commission and other fees associated with granting of the loan. The subsidy from the state budget can be received for 10 years. Proposed solution will apply to loans with decreasing instalments, therefore the loan instalment will remain at the same level even after a 10-year period. During the loan repayment, the instalments will firstly consist of the paid-up capital. Funds from the programme can be used for housing purposes, which means both the purchase of an apartment, as well as purchase of the land plot and subsequent construction of a detached house.

Programme will be addressed to people under the age of 45 who have not previously owned a property. Disposal of real estate will not entitle to qualify for the scheme. It was tentatively announced that owners of a fraction of a property not exceeding 50%, acquired by inheritance, in which they do not live, will be able to sign to the programme. The maximum amount of credit that may be obtained for a one-person household is PLN 500 thousand, while for married couples or a parent with a child it is PLN 600 thousand. The indicated amount does not include own contribution. If the loan is granted to a married couple, the age condition will have to be met by only one of the spouses. Among the assumptions of the program, there is no restriction on the price of 1 sqm of flat acquired, nor on the usable floor area of the property that will qualify for the subsidy. The purchased property can originate from both the primary and secondary markets.

The second element of the First Flat Programme is Housing Account. This solution assumes that the beneficiary deposits funds in the amount of PLN 500 to PLN 2 000 per month over a period of 3 to 10 years. If after this time the funds are used for housing purposes, the State will pay bonus at the level of the indexation rate. This index has not yet been precisely defined, but it has been announced that it will be equivalent to the inflation rate for a given year or the rate of increase in house prices, if it turns out to be higher than inflation. Therefore, if inflation falls, but real estate prices rise above inflation, the last-mentioned will be the reference for determining the bonus amount. Housing bonus will be calculated annually and disbursed once when the funds are used for apartment or house purchase or as a financial contribution to an investment, such as housing cooperative.

Housing Account is planned to be available for a person who does not own a dwelling and has not owned a property in the past (including a single-family house or a cooperative right to a dwelling). A person who lives in one small apartment with at least two of their own or adopted children may also be beneficiary of the programme (i.e. a dwelling of up to 50 sqm with two children, 75 sqm with 3 children and 90 sqm with 4, with no limit of sqm with 5 or more children).

There are two solutions that will make this programme attractive. Firstly, it is a commercially interest-bearing deposit in a bank (currently interest rate on deposits reach 7-8%). Secondly, it is the possibility of obtaining the aforementioned housing bonus reaching up to the value of the indexation rate. Housing Account provides flexibility regarding monthly deposits, there is no obligation to declare what sums will be paid to the account, as long as it is in the range of PLN 500 to PLN 2 000 per month. This financial instrument provides for the retention of the right to the bonus also in the event of a lack of deposit in one month of the year. What is more, Housing Account allows to accumulate funds for the purchase of an apartment for a child over the age of 13. If the collected funds are used to purchase an apartment within 5 years of the child reaching the age of majority, the bonus will be paid. According to the Ministry of Economic Development and Technology, there is currently no other product in Poland or the world that rewards saving and gives such a high rate of return.

First Flat Programme is scheduled to start on July 1, 2023, which will be preceded by the introduction of the relevant act. The duration of the programme has not yet been specified, but it is intended to be a long-term solution. The assumptions of the First Flat Programme promise to be very favourable. Since the announcement of the programme, Safe Mortgage Loan 2% has been described as the cheapest loan ever, while Housing Account has been described as the best deposit on the market. Implementation of the programme will show how much it will boost mortgage lending and stimulate the housing market.

Marta PolkowskaSARFiN
System Data Administrator
Senior Maintenance and Development Specialist

With the prevailing energy crisis, as well as rising inflation, from spring 2023 it will be mandatory for owners of single-family houses and flats to pay for an energy performance certificate. In what circumstances and who will be required to have such a document? What will be the penalties for not having it?

What is an energy performance certificate (energy certificate)?

Since January 1, 2009, EU Directive 2002/91/EC has made energy certification mandatory in Poland, which means that every building (with certain exceptions) is required to have an energy performance certificate. An energy performance certificate, also called an energy passport or certificate, is not something new in Polish legislation. In a nutshell, it is a document that defines the energy standard of a given building. It contains a set of data and energy demand indicators for a building or a part of it.

The energy efficiency of a building should be understood as a degree, to which the building is prepared to meet the intended needs of its users while consuming the lowest possible energy. An energy efficiency assessment is an evaluation of a set of characteristics of a building that affect the energy consumption by that building required for its use, including, among other, an assessment of the thermal insulation of the building envelope and the efficiency of the installations and equipment used in the building.

Based on the information contained in the energy certificateut, we can find out how much energy a building consumes and what we need to do to reduce the maintenance costs. At a time of rising electricity costs, as well as heating costs, this information is very useful for owners of single-family houses and flats.

Currently, an energy certificate is required for buildings built after 2009. It is also required when the building is sold or rented. In addition, it is also required in case of many subsidy programmes for the thermal modernisation of existing buildings, e.g. for the replacement of a heating source (installation of a heat pump).

The document is valid for 10 years from the date of issue. However, it may become invalid before this period expires if, as a result of conversion or renovation, the energy performance of the certified building changes.

To whom the changes will apply?

According to the amendment to the Act on Energy Performance of Buildings signed by President Andrzej Duda on 7 October 2022, the an energy certificate will also be obligatory for properties built before 2009.

Due to legal changes, from the end of April 2023, the energy certificate will be an indispensable attachment to the sale agreement of a building or premise, the sale agreement of a cooperative ownership right to premises, as well as when signing a rent agreement. This obligation relates also to buildings built before 2009.

According to information from the Ministry of Development and Technology, if we, as owners of premises in a multi-family building, want to sell or rent a flat located in a building with no energy certyficate, we will compulsorily have to draw up an energy performance certificate for the part of the building concerned, i.e. for this flat, at our own expense. In addition, the legislator imposes an obligation on owners of rental properties to provide the annual energy demand indicators already in the advertisements. It should be emphasised that it will not be necessary to carry out an energy certificate, if you live in the house or flat and do not want to sell or rent it out.

The energy certificate will also be necessary for the construction of a house, as the acceptance of the building will not be possible without it. A copy of the certificate will have to be attached to the notification of completion of construction or the application for a use permit. All these changes result from the adaptation of the Polish law to EU law.

What are the penalties for not having an energy performance certificate?

Penalties for not having such a document will only be imposed on owners if they dispose of the property or rent it out. Until now, the penalty for not having an energy performance certificate was up to PLN 10 000. The new regulations do not specify the amount of the fine. Possible penalties are to be imposed by the notary at the time of the notarial action. It is expected that they may range from PLN several hundred to several thousand, depending on the type of property. A penalty may also be imposed on the person producing the energy certificate for providing information contrary to the requirements of the Act.

How much does an energy certificate cost?

It is necessary to pay for carrying out an energy audit and preparing a certificate. Prices depend on many factors, mainly on the size and purpose of the building, the location, the availability of technical documents, the technical solutions used or the complexity of the building shell. This is why most service providers offer the price of the service individually. On the Internet, one can find offers where the cost of making a certificate for a dwelling starts from PLN 200 and for a single-family house from PLN 250.

Who can carry out an energy certificate?

According to current legislation, the author of an energy performance certificate can only be a person who has been entered in the register of the persons authorised to draw up energy performance certificates. The list of companies authorised to issue an energy performance certificate can be checked in the central register of the energy performance of buildings on the Ministry of Development and Technology website.

The selected service provider may have a lot of questions about the building, such as how it was constructed, and how individual components or installations were installed. It is also the responsibility of the person drawing up the energy certificate to check all the elements that affect the energy requirements, i.e. heating, types and distribution of installations, or even the type of window frames and positioning of the building. It is therefore worth keeping documents confirming the thermal insulation performance of individual building elements.

Other changes related to the amendment of the Act

Each energy certificate is generated through the website of the Ministry of Development and Technology in the Central Register of Energy Performance of Buildings. The amended law introduces public access to basic information from the energy performance certificates collected in this register. Similar to the Central Register of Building Emissions, in which owners have to declare what is the main source of heating in their building, the Central Register of Energy Performance of Buildings is intended to improve knowledge of the energy situation of households in Poland.

Agnieszka Zamkowska
Real Estate Market Analyst

The long-lost competitiveness is beginning to return to the real estate market. Rising interest rates, with persistently high prices, have significantly reduced the creditworthiness of potential buyers. As a result, fewer and fewer people can afford to buy their own flat. Responding to the economic situation, developers have begun to reach for various solutions to attract customers to their investment. One of them is the proposal to finish the apartment in a turnkey standard.

“Turnkey” finished, what does it mean?

A turnkey finished apartment on the primary market is a new dwelling, in which no renovation work is necessary before moving in. In such a place, when you receive the keys, you will most often find floors and tiles laid, plastered and painted walls, as well as internal doors fitted. In addition, we may already have a permanent kitchen furniture and sanitary fixtures installed. It all depends on what options the entrepreneur has on offer and which one we decide on. The proposed finishing standards are usually divided into basic, standard and premium. Of course, the higher the standard, the higher the price. The chosen standards can vary both in terms of the quality of materials used and the amount of work carried out.

Advantages

Buying a turnkey apartment from a developer brings many benefits. First of all, it is a time-saver. Despite appearances, independent arrangement, selection of equipment or watching over the renovation team consumes a lot of energy. In the turnkey option, the developer is responsible for all this.

Such a solution also helps to avoid the so-called “bad decisions”. Lack of knowledge of the specifics of renovation affects unfavourable choices. In addition, we dispose of the problem of choosing a professional finishing team. Often our inexperience is sensed by pseudo-professionals, which translates into a lower quality of services provided.

The main advantages of buying a turnkey apartment may include financial savings. Although we will pay more for the apartment at the beginning, in the end it can be very profitable. The developer, when buying finishing materials for all apartments in the building, or at least for most of them, can negotiate much more favourable prices. The same applies to services. What’s more, we won’t be surprised by unforeseen costs that we forgot to take into account. We get an estimate from the developer and know in advance the amount we will have to spend on finishing.

It is also a solution that allows you to move earlier than when buying a property in a developer standard. Personally, we can start the finishing works only after receiving the keys, i.e. after the building has been permitted for use. The developer’s team, on the other hand, has the opportunity to finish the premises, while the rest of the employees, for example, paint the facade.

Disadvantages

Purchasing an apartment in a turnkey finishing standard also has disadvantages – primarily, lack of impact on the final appearance of the apartment. Of course, some changes to the developer’s design are possible, but they are quite limited. We also have to take into account the fact that every individual adjustment is extra charged. In addition, a situation when the final finish of the apartment differs significantly from the visualization presented by the architects, is not rare.

There is also the problem of the quality of services rendered. Entrepreneurs counting costs often choose external finishing companies that offer the best rate. As usual, the price goes hand in hand with the quality. The errors most frequently pointed out include e.g. uneven plasters, poorly laid tiles or unevenly painted walls. It is not uncommon that individual elements are already damaged, e.g. scratched floor, dents or stains on the walls. It is true that we can appeal and ask for repair, but this involves additional waiting time for acceptance of premises.

Is it worth buying a turnkey apartment?

This is an individual decision and depends on many factors. It is a perfect solution for buyers living in another city, traveling on business or very busy people who cannot devote enough time to furnishing the apartment. Unfortunately, it will not be a good option for individualists, who want to arrange every corner according to their own needs.

However, it is an interesting proposition for people, who are looking for apartments for investment purposes. Such consumers care about an attractive finish, but they do not pay attention to original solutions. Often they do not want to spend time on renovations, but they want to rent the premises as soon as possible and profit from it.

Joanna Woźniak
Junior Specialist for Maintenance and Development of the AMRON System

Until the mortgage, which is the basic collateral of a mortgage loan, is effectively entered into the mortgage register of the property, bank is exposed to higher risk related to inadequate collateral for the credit facility. As a consequence, banks used to require a temporary collateral in form of so-called bridge insurance for the period from disbursement of the loan till the mortgage is established, i.e. until the date, when the registration of the mortgage in mortgage register is valid.

The insurance was executed in two ways: by additional insurance contribution paid by the borrower, amounting to approx. 0.07 – 0.1% of the value of the loan or, the most often, by temporary increase in margin.

TABLE 1. DATA ON MORTGAGE LOANS GRANTED IN Q3 2021

bank	value of new loans	number of new loans	average value of a new loan	level of bridge insurance
PKO Bank Polski	5 000 000 000	9 097	549 632	0.09%
Santander Bank Polska	2 847 030 000	8 283	343 720	1.00%
mBank	2 673 000 000	6 451	414 354	1.50%
Bank Millennium	2 249 000 000	7 957	282 644	1.00%
BNP Paribas	1 705 000 000	4 029	423 182	1.50%
Alior Bank	944 396 231	2 859	330 324	2.50%
Bank Pocztowy	11 663 789	46	253 561	0.09%
	15 430 090 020	38 722	on average: 371 060	on average: 1.10%

source: elaboration by Ministry of Justice based on: https://prnews.pl/raport-prnews-pl-rynek-kredytow-hipotecznych-iii-kw-2021-462315 (as for: 24.01.2022)

In recent years, the time needed for establishing the mortgage significantly increased in most of mortgage district courts. This resulted from both legal changes, in particular due to the act of July 20, 2018 on transformation of perpetual usufruct right to plots under residential buildings into the ownership right (Official Journal of 2018, item 1716), and reasons independent from State interference, i.e. COVID-19 pandemics. According to statistics published by the District Court for Warszawa-Mokotów in Warsaw, dealing with all applications related to mortgage registers of properties located in the city of Warsaw, in 2019 the number of mortgage applications accounted for 541 527, in 2020 it was 557 069, and in 2021 – 427 477, while in 2018 there were only 249 691 such applications. It is very difficult to estimate the time necessary for valid registration of the mortgage in mortgage register both for the borrower and for the bank. It depends not only from the city, where the property is located, but even from the particular court’s division, and differences happen to be huge. For example, in District Court in Opole, the mortgage entry took approx. 1 month, in Bialystok – 2 months, while in Warsaw or Gdansk it took even a year. In addition, one of decisive factors was whether the loan was taken for finance the purchase of property on secondary market (most of existing properties are already registered in mortgage register) or on primary market – in such case, the property must be registered in mortgage register first. In effect, the borrowers were uncertain about the final cost related to the effective mortgage entry, which increased the monthly loan instalment.

This problem was noticed by the government, which submitted to the parliament the draft act on changes in the Mortgage Loan Act of March 23, 2017 (Official Journal of 2020, item 1027 and 2320 and of 2022, item 872). As it was presented in the explanatory memorandum to the draft, in case of an average mortgage loan amounting to PLN 371 060 granted for 25 years, the average instalment was equal to PLN 2 839.36, while the average extra margin equivalent related to the waiting time for mortgage entry amounted to PLN 273.83 per month. Assuming the 8 months period, the total amount charged form the borrower was as high as PLN 2 190.65.

The Ministry stressed that in practice vast majority of mortgage applications are accepted by courts – rejected applications constituted only 1.6% of all considered applications in 2020-2021 (statistics include not only applications for mortgage entry, but also for change or removal). Therefore, the authors of draft proposed that all costs related with the mortgage entry paid by the borrower should be returned.

During the public consultations, it was pointed out that despite from justified and legitimate purpose of the new law, as there is no reason for consumers to pay for dilatory in justice administration, there is also no justification for transferring those costs to banks, which also have no influence on processing time of mortgage applications. In addition, it is irrelevant from the perspective of the bridge insurance whether the mortgage application will be accepted or rejected, as the insurance does not cover from risk of rejection, but provides guarantee against the non-repayment of loan before effective and strong collateral is established, i.e. against the situation when enforcement proceedings are impossible to conduct because of lack of effective mortgage entry in the mortgage register. What is more, in case when risk determined in insurance agreement does not materialise, the insurance company does not return the cost of insurance policy neither to bank, or to any other client. However, despite the questions and comments, the act was adopted in the Parliament, with no substantial changes.

On September 5, 2022, the Parliament adopted the aforementioned act and changes came into force on September 17, 2022. According to the act: „in case of granting a mortgage loan, loan agreement may provide for an additional cost related to processing time of mortgage application, which will be bore by the borrower until the effective mortgage entry into the mortgage register”, but this additional cost will be returned to the consumer or allocated to repayment of the outstanding loan amount, when the mortgage entry is valid. Finally, the borrower will not be charged for risk related to that collateral.

It should be pointed out that the new law is applicable only to new mortgage loan agreements concluded by consumers (i.e. to loans not related to business activity of the borrowers), and the obligatory recovery of costs related to bridge insurances is applicable in case of loan agreements concluded after the date of entry into force of the act, as well as in case of loan agreements concluded before that date, if on the date of new law’s entry into force the mortgage application has not yet been determined.

Irena Kruczek-Sidło
AMRON System Coordinator

On 1 January 1995, with the entry into force of the Act on Premises Ownership, the concept of a housing association was introduced, defined as an obligatory form of association of owners of premises in property – a new legal and property entity in Polish law. The Act was not the first piece of legislation to regulate the ownership of premises, earlier these issues were regulated by the Civil Code. The management of the common property was regulated much earlier, with the entry into force of the Decree of the President of the Republic of Poland of 24 October 1934 on ownership. The separation of independent premises in a multi-apartment building resulted in a common property and the need to manage it. Referring to Chapter I, Article 3 of the Premises Ownership Act – the common real estate is the land and those parts of the building, which are not part of the premises and do not serve exclusively for the use of the owners of the premises.

The fundamental differences between large and small housing association are the legal basis, on which they operate. Knowledge of these differences and of the fact that with the ownership of premises comes a share in the common property can be helpful when making decisions on purchase of a flat.

Common property management in a large housing association

Large housing association includes more than three premises. Being the owner of the premises, you and the rest of the owners can determine the manner of management of the common part in the agreement on the establishment of separate ownership of premises or later in a contract (in the form of a notarial deed). In case of a large community, the owners of the premises are obliged to adopt a resolution on the management board election. The most common forms of management are owner management, entrusted management or forced management. Only an individual can become a member of the management board – regardless of whether or not this person is a member of the housing association. The duties of the management board are set out in the Act on Premises Ownership – among other things, it is obliged to manage the affairs of the housing association and has a representative function.

One of the features that distinguish housing communities is the way, in which the management board takes actions. Basically, two types of actions can be distinguished: ordinary management actions, which are taken independently by the management board, and actions exceeding the scope of ordinary management, for which a resolution of the apartment owners giving a power of attorney to enter into contracts and consenting to its execution is necessary. In large housing associations, resolutions play a very important role. Resolutions of the owners are adopted at meetings of the housing association or during an individual collection of votes by the management board – a resolution is adopted after obtaining a majority of votes. Each of them may be challenged in court by the owner of the premises on such grounds as:

• non-compliance with legal provisions,
• infringement of the principles of proper functioning and management of the property,
• non-compliance with the agreement of the owners of premises,
• other infringement of the owner’s interest.

The Law on Premises Ownership allows for the possibility of suspending or dismissing individual members or the entire management board – mainly to avoid situations, when the management board may expose the community to ineffective management, making decisions that are not in line with the majority of community members. The dismissal or suspension is carried out by means of the adoption of a resolution by the majority of the owners.

In large housing associations, the management board is also obliged to convene a meeting of the housing association at least once a year in the first quarter. According to Article 32 of the Apartment Ownership Act, the management board notifies each apartment owner in writing of the owners’ meeting at least one week before the meeting. During the community meeting:

• the owners of the apartments should adopt a resolution on the annual business plan and possibly on the amount of the advances to be paid to cover costs;
• the management board should submit a report on its activities, and the owners of the apartments should assess these and adopt a resolution on the approval of the management board ;
• evaluation of the management board/property manager.

If a meeting is not convened by the management board or property manager within the specified time, the Act provides that the owners of the premises have the right to convene such a meeting themselves. Each owner may have a proxy and be represented by him or her at the meeting. When a resolution is passed, the management board is obliged to inform all owners of this fact.

Common property management in a small housing association

According to Article 19 of the Premises Ownership Act: “If the number of separate premises and non-separated premises still belonging to the current owner is not greater than three, the regulations of the Civil Code and the Civil Procedure Code on joint ownership shall apply to the management of the common property accordingly.” This means that if the manner of management of the common part is not regulated, owners in small housing associations decide on the operation based on the above legal basis.

According to article 200 of the Civil Code, each co-owner has a duty to participate in the management of the common thing (so-called direct management). The difference between the types of housing associations is also noticeable at the level of management activities. For acts of ordinary management in a small housing association, the consent of the majority of the apartment owners is necessary, while for acts exceeding ordinary management the consent of all co-owners is needed. In case of lack of consent for ordinary management acts, each owner may ask the court to give authority to do so, while in case of lack of consent for acts exceeding ordinary management, owners who hold more than half of the shares may ask the court to make a decision, taking into account the interests of all co-owners.

Premises’ owners may also request a court decision if the majority of co-owners intend to take actions, which are contrary to the proper functioning of the housing association. It is also important to note that at the same time, the owners of the premises have the right to apply to the court for the appointment of a property manager, if the decision-making in the housing association is problematic or violates the rules of proper management and harms the minority. It is important to mention that in small housing associations there are no resolutions in operation – the owners make decisions by agreement. A characteristic feature of management in a small housing association is the equality of rights and obligations of all co-owners. This means making decisions collectively, but also implementing them together. The management board is not appointed. It is possible to entrust the management to an external entity – by means of the first agreement on the establishment of separate ownership of the premises, or later in a resolution of the owners recorded by a notary public. Due to the fact that housing associations of up to three premises base their operation on the Civil Code and the Code of Civil Procedure, their management is somewhat more complicated than that of large associations – the situation when one of association members is absent may serve as an example. Then, for example, it is impossible to adopt a business plan. On the other hand, in small housing associations, the owners may have a stronger influence on decision-making.

Summary

Small housing associations, unlike large ones, are not obliged to appoint a management board, although if the owners have reached an agreement, then nothing prevents them from appointing one. Small housing associations operate on the basis of the Civil Code and the Code of Civil Procedure, whereas large ones are based on the Apartment Ownership Act. Actions exceeding the scope of ordinary management may be performed with the consent of all owners, in case of large housing associations – their majority in the form of resolutions. Ordinary management actions require the consent of the majority of owners, while in large housing associations the management board takes them independently. In housing associations with more than three premises, the removal or suspension of the management board can be requested at any time by a resolution of the owners. Cases in small housing associations that are disputed and no agreement can be reached, may be settled in court.

Karol Kacprzak
Maintenance and Development Specialist

Attempts to answer the question ‘to buy or to rent’ have been appearing in the publications of many housing market analysts for quite a long time. Naturally, the answer is not obvious. We all know pros and cons of both forms of meeting housing needs. Buying a flat, even when taking a long-term mortgage loan, is also a form of saving, investing owned or accumulated capital, building a sense of long-term stability and security, also in the context of having a source of permanent rental income. Moreover, in future this capital may be passed on to next generations. On the other hand, the purchase of a flat is associated not only with significant financial expenditures, but also creates a permanent obligation in form of the necessary maintenance costs. In turn, renting a flat offers the ability to adjust the size of the property, its location or the level of costs incurred to the current needs and financial capabilities of the tenant. It is also important that there is no need to incur long-term liabilities and demonstrate creditworthiness at the same time. All this, however, at the price of spending money purely for consumption, without the effect of capital accumulation. We are also aware that both forms respond to the needs of a slightly different type of consumers. Renting a flat will be a choice of those market participants, who do not want or do not have to decide on stabilization or for whom the rental is related to the necessity of satisfying a longer or shorter, but still temporary housing need. On the other hand, the purchase is going to be made by those, for whom a sense of stability is important.

Dynamic changes taking place in recent quarters in the environment of the residential market significantly changed its structure. Increases in the interest rates of the National Bank of Poland – from 0.10% in October last year to 6.75% currently, along with rising inflation and amended Recommendation S of the Polish Financial Supervision Authority, obliging banks to take into account an additional 5% buffer for an increase in interest rates (also in case of fixed-rate loans), contributed to over 50% decrease in borrowers’ creditworthiness. As a result, in a following quarters we have noted significant decreases in the number of newly granted housing loans. On the other hand, rapidly growing cost of living, together with rising prices of flats, resulted in a very marked decline in the price availability of flats to the level recorded recently in 2014, with the prospect of further declines in the coming quarters. This is indicated by the Housing Accessibility Index listed by the AMRON Centre.

source: AMRON

Despite increases in rents, such dynamic changes did not take place on the rental market. According to AMRON Centre’s data, the average cost of renting a two-room apartment of a floor area of ​​approximately 45 sqm in Warsaw in the second quarter of 2021 amounted to PLN 1 528 per month, obviously excluding administrative fees and utilities. With an interest rate of 2.48% (valid at that moment) and the flat price level (on average PLN 10 200 per square meter), monthly loan instalment was slightly higher and amounted to PLN 1 559. In the second quarter of 2022, after a fundamental change on the demand side of the rental market, resulting not only from students return to full-time classes, but also to the influx of a large number of refugees to Poland after Russia’s aggression against Ukraine, the average rent for an apartment of this size amounted to PLN 2 115. Thus, the increase in rent rate during the year was 38.5%. At the same time, however, as a result of an increase in loan interest rates (up to 9.06%) and the increase in housing prices (up to PLN 11 300 per square meter), the instalment of a loan taken for the purchase of such a flat almost doubled (increase by 98.5%) and amounted to PLN 3 095. As a result, the difference between the level of rent and the loan instalment was almost 50%. This disproportion is shown at the diagram below.

source: AMRON

It should be noted, however, that this analysis takes into account both apartments from the most popular segment (two-room apartments with the floor area of about 40 sqm) and a loan taken for 25 years with LtV level close to 80%, which is also the most popular on the market (approx. 75% of all granted loans). Naturally, for loans with a lower LtV ratio, these differences will be smaller.

The ’ to buy or to rent’ alternative for a large number of the market participants seems not to be realistic any more. In current market situation, they simply cannot afford to buy an apartment and therefore rent remains the only possible choice. Still we should remember that a further increase in the demand for flats for rent will also mean further, perhaps quite dynamic increases in the level of rent rates, especially that in current situation we can expect a decline in the number of purchases of flats for investment (i.e. for rent), which have been so popular in recent years.

Jerzy Ptaszyński
Research and Market Service Director

Central Statistical Office announced recently the so-called quick estimate of the Consumer Price Index, which in September 2022 was quoted at 17.2%. Inflation at a similar level was recorded last time in February 1997. Therefore, it is the highest notation of inflation in the current century. What matters the most from the point of view of both mortgage and housing markets is that this increase exceeded analysts’ forecasts and it makes the following decisions on further increases in interest rates even more plausible. A year ago, in October 2021, the NBP reference rate was only 0.10%. After 11 consecutive monthly increases, it is 6.75% now, with a prospect of further growth. Increases in interest rates, as well as new requirements of the amended “Recommendation S” of the Polish Financial Supervision Authority, effective from 1st of July this year, obliging banks to include an extra 5% risk buffer for increases in interest rates (interestingly also in case of fixed-rate loans), contributed to significant, over 50% decrease in the creditworthiness of potential borrowers. As a result, in following quarters we have observed drastic drops in the number of newly granted housing loans. In second quarter of this year, compared to the number of loans granted in the same quarter of the previous year, 43.70% less mortgage loans were granted for an amount lower by 38.85%. This meant a clear deepening of the trend that emerged in the first quarter of 2022, which definitively will continue or even deepen in following quarters.

Additionally, dynamically growing costs of living, combined with the rising flats prices, resulted in very apparent decline in the price availability of flats. This is indicated by the Housing Accessibility Index listed by the AMRON Centre, the quotations of which in the second quarter of the year fell to 162 points, i.e. to the level comparable to the one recorded in 2014. Both these factors (decrease in loan availability and decrease in housing availability) contributed to a very clear reduction of turnover on the housing market. It is estimated that the number of apartment sales transactions has even dropped by half as compared to the number of transactions concluded a year ago. Despite such a significant reduction in demand on the housing market, preliminary AMRON Centre data for the third quarter of this year do not indicate significant flats prices drops in nominal terms in the largest Polish cities, as expected by some market observers. At present, however, we can talk about a very marked slowdown in their growth dynamics.

CHART 1. AVERAGE TRANSACTION PRICES OF 1 M2 OF APARTMENT IN SELECTED CITIES

source: AMRON

The biggest change recorded on the markets of the six largest Polish cities is a decrease by 3.34% in the average transaction price in Lodz. At the end of September, it amounted to PLN 6 464, which was PLN 223 less than in the previous quarter. Slightly lower declines, by 1.96% and 1.61%, respectively, were recorded in Cracow and Gdansk. On the other hand, the average prices in Warsaw and Wroclaw increased – by 0.94% and 2.20%, respectively (to PLN 11 355 and PLN 8 906), and the average price per square meter in Poznan remained basically unchanged (an increase by 0.03%, i.e. PLN 2.37 per square meter). In other voivodship capitals, drops in average prices by 3.39% in Bydgoszcz and by 2.84% in Katowice, were the largest recorded changes. These results should of course be treated as preliminary estimates.

TABLE 1. AVERAGE TRANSACTION PRICES OF 1 M2 OF APARTMENT AND THEIR CHANGES IN SELECTED POLISH CITIES IN Q3 2022 (PRELIMINARY ESTIMATES)

city	Price in Q3 2022	Change Q3 2022/Q2 2022	Change 2022/2021
Warsaw	11 355	0.94%	5.75%
Wroclaw	8 905	2.20%	12.27%
Gdansk	9 228	-1.61%	0.61%
Cracow	9 658	-1.96%	4.42%
Poznan	7 675	0.03%	0.98%
Lodz	6 464	-3.34%	4.45%

source: AMRON

Lack of continuation or a decisive breakthrough of the trend indicates that the housing market in a very dynamic environment is still looking for a new equilibrium point and observed changes result largely rather from changes in the structure of turnover than from absolute changes in housing prices. In context of rising inflation, however, it is worth noting that the dynamics of changes in average home prices in the largest Polish cities over the horizon of four quarters is clearly lower than the level of growth in the Consumer Price Index recorded by the Central Statistical Office. This naturally signifies a decline in home prices in real terms.

Jerzy Ptaszyński
Research and Market Service Director