AMRON-SARFiN Report 2/2012
Lending results for second quarter of 2012, both in terms of volume (49 620) and value of granted loans (PLN 10.044 Mio) are very serious signals alarming turbulences on housing finance market. It was the first time since several years, when second quarter results turned out to be worse than results obtained at the beginning of the year. Such situation negate the regularity observed during few recent years, when results for second quarter were even 20-30% higher than those for first quarter. This time it is not as we might have expected. While the amount of loans granted in Q2 2012 is slightly higher than in previous quarter, the total value of newly granted loans was lower. Unfortunately, this downward tendency from quarter to quarter has been lasting for over a year.
When lending figures are getting worse, data related to housing market presents surprisingly well. According to initial data published by Central Statistical Office, during the period from January to June 2012, 68 129 housing units were completed (i.e. 24.9% more than during the corresponding period of 2011). Compared to the first half-year of 2011, the amount of started housing units decreased to 80 681 (i.e. approximately 0.8%), whereas the number of construction permits issued remained stable comparing to previous year and amounted to 88 076. This result was determined by large number of constructions started in April, what can be explained with a new Act on protecting rights of housing unit or single family-house purchasers binding since April 29, 2012. Great part of developers had decided to start new investments before the new restrictions became obligatory.
Second quarter of 2012 brought further decline of average prices in all the biggest cities in Poland – it ranged from less than 1% to over 3%. Compared to the first quarter of current year, the largest decline (of PLN 182 per sq.m.) was noted in Wroclaw – the transaction price of a square meter of a housing unit in Wroclaw amounted to PLN 5 473. In capital city, the average transaction price declined to PLN 7 407 per sq. m., what means a drop of PLN 129 (in relation to the price level of Q1 2012). Comparison of the current results and the results of the corresponding period of 2011 prove that the maximal price decline in Wroclaw and Lodz – respectively by PLN 672 (10.9%) and PLN 323 (7.8%) per square meter of a housing.
One of the most significant stimulus of the housing prices decline was increase in supply of newly-built housings, as well as more and more restricted availability of mortgage loans. Current prospect allows to forecast the constant, though slower than in the first half-year, decrease in transaction prices, which seems to be continued at least till autumn next year.
Banks’ withdrawal from currency loans offer (share of PLN loans in the new portfolio has already reached 95%), mortgage lending restrictions resulting from new supervisory regulations and extinguishing of the „Family on Its Own” programme lead to further, drastic reductions on both mortgage and housing market. Determination of housing purchasers, who will try to benefit from subsidy available during the last months of the governmental programme may be – in my opinion – the only determinant of fulfilling my prognoses of 2012 mortgage lending results at the level of PLN 44 billion. Otherwise, the repetition of results of the post-crisis year 2009 seems to be quite probable.
Unfortunately, these clear signals of increasing crisis on housing finance market are not noticed either by government or by parliament. Necessity of a long-term program of state support for housing development, including a system stimulating households to long-time saving.
Jacek Furga
Head of AMRON Centre
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