AMRON-SARFiN Report 2/2014

Unlike results of Q1 and Q2 2013, which were not congruent with the model of seasonal cyclicity, the numbers noted in Q2 2014 related to the results carried out by banking sector in the previous three quarters confirmed seasonal cyclicity of the phenomena occurring both on housing loans and – what is more obvious – also housing market. The results achieved in Q2 2014 are similar to the level of numbers noted in Q3 and Q4 2013. Although it is unclear whether significant increase both in number (about 8.48%) and value of mortgage loans (8.17%) granted in Q2 2014 comparing to Q1 2014 is a sign of a trend change or just a seasonal correction. A summary of the first half of this year shows that the year 2014 may bring slightly higher result of lending than 2013, but is still too early to speculate about any signal of recovery in this area.

To sum up the first half of 2014, a significant increase in construction permits issued and construction started on the primary market (respectively by 38% and 51% compared to 2013) and sustained at a similar level number of completed housing units can be seen in the housing market. However, analyzing these two periods we must pay attention to the fact that development sector reduced the supply in 2013 and it was a result of a very high number of dwellings put on sale in 2012 (which was caused by entering into force of the so-called “Development Act” – as it was repeatedly pointed out in the previous issues of the Report). Therefore, the results of 2014 should not be considered as an exceptional recovery, but rather a natural reaction to the sector at a satisfactory level of sales.

In Q2 2014 the average transaction price decreased in three cities. In Warsaw the average price was lower by PLN 40 per square meter comparing to the previous quarter. Most serious depreciation of prices was noted in Lodz and Wroclaw, where the average price decreased by PLN 81 and 118 respectively. In other cities slight increases in average price of 1 square meter of a flat (between PLN 20 and 100) were noted. Generally, we can confirm stabilization of the average prices of practically all of the analyzed markets.

Despite of the relatively high interest in the “Flat for Youth” government Programme called noted in Q1 2014, the results of Q2 2014 confirmed my earlier skepticism. In Q2 2014 interest in ‘Flat for Youth’ Programme was relatively lower comparing to Q1 2014. The share of loans with subsidies in total number of newly granted loans decreased from over 10% to 8,4%. The government little changes, which increasing the amount of state aid for the participants of this Programme, will not help. It is the time for implementing system solutions. Polish Bank Association, in cooperation with senators of Budget and Public Finance Commission, defined recommendations for a system supporting long-term saving on housing purposes, adapted to Polish macroeconomic determinants and eliminating risk for national budget.

Starting a system supporting long-term saving on housing purposes will be an issue of key importance for further development of the housing market in Poland.

Jacek Furga
Head of AMRON Centre

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