AMRON-SARFiN Report 2/2013
It is a great pleasure to share some good news with you for the first time since last five quarters. In fact, previous quarter’s mortgage results were the weakest for four years, both in terms of volume (41.6 thousand of new loans) and value (PLN 8.0 billion). Fortunately, last quarter’s results turned out to be better than Q1 2013 and also than Q4 2012.
I believe that regular readers of the Report remember, when a year ago we stressed the fact that the results recorded in second quarter of 2012 were weaker than those recorded in first quarter, what meant disturbance in seasonal cyclicity on mortgage loans market. It seems that the situation gets back to normality. There were 44 079 new housing loans of a total value of PLN 9.160 billion recorded in second quarter of 2013. The scale of such increase is however not enough significant to infer if it is a first sign of mortgage market recovery. I believe it’s not yet, as banks seem to counteract such a recovery as they would not be interested in upswinging the loan portfolios. My last experiences in applying for mortgage loan prove that the decision-making process of the applications’ approval, restrictive formal requirements and the inordinate prudence in customer evaluation make potential borrowers finance transactions with cash or, to reduce formalities, apply for decreased loan, not to exceed 50%LtV ratio. That confirms previously received information on increasing number of housing transactions financed with no mortgage loan, particularly in segments of the cheapest and the most expensive dwellings.
Seasonal nature of the housing market was confirmed also on construction investments market, where an increase was recorded both in number of constructions started – by 31% and construction permits issued by 73% (both comparing quarter to quarter). At the same time, analysed quarter brought decreased (by 16%) number of completed housing units – total number of completed dwellings equalled to 31 367 units. Comparison of results of Q2 2013 and Q2 2012 prove the diminished supply on housing market. Number of new housing units constructions started in Q2 2013 was the lowest since 2006 and that confirms actual slowdown on primary housing market and lowered, but stabile level of activity of all of types of investors. As the effect, we witness continuous downward economic activity trend, in particular in developers’ sector, combined however with certain symptoms of economic recovery. And that is another good news in this Report.
Housing market seems to get stabilized as well – changes in transaction prices in Q2 2013 ranged from increase by PLN 43 per square meter in Warsaw and Poznan and decrease by PLN 74 in Wroclaw. Comparing Q2 2013 and Q2 2012, the average transaction prices in all analysed cities (excluding Bialystok) decreased by no more than 10%.
Monetary Policy Council’s decisions on subsequent decreases in interest rates, as well as first signs of economic growth, should support further recovery on housing and mortgage market.
Positive signals for housing finance in Poland came from both chambers of Polish parliament. In Senate, there was held a debate initiated by Commission of Budget and Public Finance on system of saving-building banks and in Sejm, two parliamentary draft laws were notified: on reversed mortgage and on state support for long-term saving on housing purposes. Implementation of system of saving-building banks may be the impulse for stabile, long-term and constant upward trend in housing sector, which shall support not only those, who still don’t have their own flat, but also the whole economy.
Jacek Furga
Head of AMRON Centre
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