AMRON-SARFiN Report 2/2017

For the last few years housing market has been recording systematic and sustainable growth, which was confirmed also by the results of the second quarter of 2017. While interest rates are low, many people consider buying a dwelling as a capital investment, which brings measurable profits in a long term. On the other hand, there is also a large group of buyers, who changed their “first dwellings” purchased between 2005-2008 during property boom to larger ones in order to improve their current housing conditions. Negative interest rates decrease Poles’ propensity to invest the financial surpluses in banks and support investing in housing properties for rent, especially at such attractive and low cost housing loans. Suspension of accepting the applications for loans subsidised under the ‘Flat for Youth’ Programme did not affect either sales results or the number of new housing loans.

In the period from April to June 2017, banks basically repeated the impressive results from the first quarter and granted almost 50 thousand housing loans, the total amount of which was higher by over 6% and accounted for almost PLN 12 billion. Similar increase concerned also the average value of a PLN housing loan granted in Q2 2017, which amounted to PLN 233 thousand. Share of Warsaw in the structure of all new housing loans granted in Poland increased again and amounted to 42.83%.

The newest data published by the Central Statistical Office (GUS) confirmed the very good condition of Polish housing sector. The number of issued building permits, as well as the number of started investments have been systematically increasing. In Q2 2017, permits for construction of 70 453 were issued and 61 830 new dwellings were started, i.e. respectively more by 16.97% and 39.87% than in the previous quarter. The number of dwellings completed in the period from April to June 2017 decreased by 7.14% on a quarterly basis and amounted to 37 689.

Precise analysis of changes in the average transaction price per square meter of the floor area of dwellings in particular locations in the last few quarters indicates their high fluctuation. However, comparison of prices over the last 3 years clearly confirms the systematic, although moderate increases: in Warsaw and Gdansk by over 6%, in Wroclaw by 5%, in Cracow – by less than 3%. A decrease in the average transaction price was noted only in Katowice agglomeration – by 5% in this period.

Spectacular results of mortgage lending in Q1 2017 and continuously high lending activity in Q2 2017, despite the exhaustion of available funds under the ‘Flat for Youth’ Programme, as well as persistently low transaction prices and record-low PLN exchange rate make us change our forecast for banks’ lending activity level in 2017. Results promise to be higher than in 2012, therefore reaching 200 thousand of concluded agreements for a total value of over PLN 40 billion.

The first opportunity to verify this forecast will be the 14th Housing Finance Congress organized by the Real Estate Finance Committee at Polish Banks Association on 30 November and 1 December, 2017. During the Congress, as in previous years, we will present the next issue of the Report summarizing the results of Q3 2017. The leading topics of this year’s Congress will be the implications of the implementation and interpretation of the Mortgage Credit Act and the assumptions of the National Housing Programme, as well as the alternative proposals of Polish Banks Association to solve the housing problem in Poland. Already today, please reserve a date to participate.

Jacek Furga,Ph.D.
Head of AMRON Centre

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