AMRON-SARFiN Report 2/2011
Banks’ lending figures for second quarter of 2011, both in terms of number (62,197 credits) and value of granted loans (PLN 13.395 billion), represent an increase compared to the results of the first quarter, respectively by 9.33% as far as value and 8.02% as far as number is concerned. These results signify the return to the lending level from the Q2 and Q3 of 2010. This was mostly the result of systematically revised downwards of the banks’ loan margins and other fees concerned with mortgage lending policies. Another important factor of the lending growth was the ongoing discussion and parliamentary works on changing the conditions of the governmental “Family On Its Own” programme. The borrowers availed the last realizable chance to benefit from this programme in the second quarter of 2011, before implementation of new regulations.
Gaining the volume of new loans at a level of almost PLN 26 billion in the first half of the year seemed to confirm the forecasted results for 2011 at the higher level than those gained in 2010 (PLN 48.7 billion). However, the unusually weak performance in June and in both traditionally slow summer months indicate that this surplus can be symbolic. Moreover, the President signed the law amending the rules of the “Family On Its Own” programme. In result, on most of the markets it will become impossible to find a housing fulfilling the legal criteria for subsidies. From that perspective, highlighting the extension of the programme on single persons and persons in partner relationships is only a distraction from the government’s complete withdrawal from the programme, which
I believe is actually over.
Despite the continuing – since a few quarters – dominance of PLN loans in new mortgage lending (at a level of almost 80%), share of foreign currency loans in banks’ mortgage portfolios remains high – at the level of over 62%. Share of CHF loans is dominant and reaches 53% of the total loan portfolio.
Situation in the residential market is much worse than in the corresponding period of 2010. During the period from January to June 2011, the construction of 80,010 dwellings was commenced in Poland, which makes a decrease of 1.3% on the corresponding period of 2010. The trend of dominance of self-builders is being continued – this group of investors started the construction of 48,508 units, which makes an increase of 7.4% compared to the year 2010. Real estate development companies’ sector with the number of 28,529 construction started, reached the result 9.3% lower than in 2010.
According to preliminary GUS data, during the period of January-June 2011, 55,403 housing units were completed, which makes 13.1% less than in the corresponding period of 2010. The downward trend in the number of dwellings completed is still observable in the majority of investors. Only self-builders reported an increase of 3.4% compared to the corresponding quarter of 2010. In the first half of 2011, self-builders completed 33,612 housing units.
On the other hand, the number of permits for construction of housing units issued in the period of January-June 2011 increased – it reached the level of 88,094, i.e. 7.3% more than the number of building permits issued during the corresponding period of 2010. In the light of forecasted actual demand, determined by the availability of mortgage loans and – on the other hand – willingness to borrow, will it result in an increase in the number of dwellings commenced in the coming months?
Q2 2011 brought a further decrease of average prices (from PLN 50 to 150 per 1 square meter of the floor area) on the most of major housing markets. The biggest decrease was recorded in Warsaw and Poznan. Minimum average price increases were noted only in Wroclaw, Gdansk and Katowice agglomeration. In the second quarter of 2011 the highest average transaction price per square meter among the surveyed cities was recorded in Warsaw – PLN 7,826 and the lowest in the Katowice agglomeration – PLN 3,432.
The decline of housing prices was mainly a result of the growth of supply of housing form preliminary market, observed since mid-2010. The increase in housing supply resulted from both the increase in the number of newly commenced investment and the resumption of those that have been suspended in previous years because of the subprime crisis. It also means that in the next few months the rise in house prices is rather not possible. Especially taking into consideration signals of the next wave of global economic crisis, the turmoil around the CHF loans triggered by politicians and the extinction of the “Family on Its Own” programme, which shall result in discouraging of potential buyers from financing the transaction with a mortgage loan.
Jacek Furga
Head of AMRON Centre
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