AMRON-SARFiN Report 3/2011

Banks’ lending figures for third quarter of 2011, both in terms of volume (59 571) and value (PLN 12.8 bln), confirm the decrease of over 4%, comparing to the records of the previous quarter. Basing on the current results, slightly weaker than expected, it is hard to anticipate whether banks and potential borrowers will try to avail the time before the full version of Recommendation S becomes binding and decide to take the postponed housing loan decisions.

Mortgage loans portfolio of the entire banking sector hit the highest scores, both in terms of volume (for the first time it exceeded total level of 1.6 Mio of active mortgage loans), and a total value of granted loans, which exceeded PLN 300 billion. However, providing that the clear drop of lending figures in Q3 2011 will continue in the last quarter of the year (and as far as now, current observations of banking sector confirm the correctness of such prognosis), it may be difficult to return to the lending level of the year 2010. If this assumption turns into a fact, both the government and the parliament shall read it as an urge for more radical decisions in the realm of housing policy.

Decline tendencies were observable also at the housing market. The number of dwellings under construction commenced between January and September 2011 increased of 0.5% compared to corresponding period of 2010 (i.e. amounted to 128 296 apartments), however the number of completed housing units decreased of 10% and amounted to 87 274 units. During three quarters of 2011, the number of  permits for constructions of new housing units increased – in total, there were 141 310 permits issued.

Q3 2011 brought a further, but weaker than in previous quarters, decrease of average transaction prices (from PLN 50 to 100  per 1 square meter of the floor area) on the most of major housing markets. An exceptional decrease – up to PLN 300 per 1 square meter – was recorded in Wroclaw. Minor increases in average prices were noted in Gdansk and Bialystok. The decline of housing prices resulted from increasing supply of new flats observed since mid-2010 and – from the other hand – decline of banks’ lending activity, resulting in decrease of effective demand for residential property. Moreover, it seems that such a trend on residential market shall become unchanged in the upcoming months.

The restrictions in granting loans in foreign currency, government’s withdrawal from the “Family on Its Own” programme, as well as aggravations in procedures of customers’ creditworthiness enforced by the newest supervision regulations, have already brought the effects – but are those effects desirable?

Jacek Furga
Head of AMRON Centre

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