AMRON-SARFiN Report 1/2013
Due to already confirmed seasonal cyclicity of both mortgage and – which is more obvious – housing market, analyses presented in the Report refer to numbers noted in Q1 2013 in relation to numbers noted in previous quarter (Q4 2012), as well as to those of respective period of previous year, i.e. Q1 2012. Conclusions, however, are not much optimistic – Q1 2013 results turned out to be better than the results of … Q1 2009. But from the other hand, no forecasts or predictions for last quarter did presume any recovery from the market slowdown observed constantly since half of 2011. Both number of new loans (41.6 thousand) and value (PLN 8.0 billion) were the lowest since last four years.
Analysis of changes in structure of loans granted in Q1 2013 from the perspective of LtV ratio, repayment period or currency prove that banks started to adjust the offer of mortgage lending to new Financial Supervisory Authority’s requirements included in already finalised amendment of Recommendation S:
- share of new loans with LtV ratio at the level above 80% diminished by 1.4 p.p. and as for the end of Q1 2013 it amounted to 50.7%
- share of new loans granted for longer than 35 years did not exceed 1%
- loans in foreign currencies constituted 1.12% of the new loans portfolio.
In Q1 2013, declining mortgage lending results proceeded with concurrent decrease in housing development ratios. According to Central Statistical Office’s data, number of issued building permits diminished by 23% and number of constructions started was lower by 31% than last year. Slight increase (by 2% comparing year to year) was noted only in number of housing units completed.
Changes in average housing transaction prices noted in the biggest Polish cities resulted from local determinants. The greatest decrease in the average price per square meter amounted to PLN 105 and it was recorded in Katowice agglomeration. At the same time prices increased in most of the biggest cities – the greatest increase (by PLN 75 per sq.m.) was noted in Gdansk. But still, it does not mean the trend change, but only price adjustments after the “Family on Its Own” Programme. Before termination of the Programme, transaction prices were adapted to binding limits and quite often some part of the housing cost was included in prices of parking lost or other additional premises.
Further decrease in housing prices in cities surveyed for calculations of the Housing Availability Index, decrease in interest rates levels of new loans granted in Q1 2013 related to economic recession and diminishing reference rates, together with increase (by 1.43%) in the average earnings level per exemplary family resulted in increase of the HAI M3 ratio by 10.78 points comparing to previous quarter and by 22.81 points comparing to the ratio level noted in Q1 2012.
Despite progressive toning down the most restrictive requirements of Recommendation T or S, it is hard to observe the increasing interest in mortgage lending, both from the perspective of banks and purchasers. At the same time, number of housing purchase transactions financed without mortgage loan is increasing. Strong impulse from the government is necessary to make that mechanism working more efficient, for the benefit not only of potential purchasers, but also of the whole economy. Another substitutive solution like the currently discussed “Flat for Youth” Programme will definitively not result as expected.
Jacek Furga
Head of AMRON Centre
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