AMRON-SARFiN Report 3/2012

This period of last three years was a difficult time of test for Polish housing and mortgage markets in global crisis conditions. The results of that test are systematically recorded in successive issues of our Report, since the demand for reliable and dependable information is systematically growing. With a great satisfaction we observe the growing group of Report’s regular readers, including professional market participants and its observers, as well as potential investors from all European countries. Our response to increasing interest in trustworthy information on Polish market is AMRON-SARFiN Report available in English since the beginning of 2011 and since September 2011 – in extended version. Orders for specialist, individual reports, addressed  to AMRON Market Research and Analysis Division by developers and investors prove that AMRON’s reports are found solid and reliable. At the same time, we observe increasing interest in our reports on changes in average prices of housing units, construction plots and rural areas for particular locations, actualized on quarterly basis and available at AMRON Centre website. For housing units located in seven major Polish cities, property value estimation report enables to estimate a predictable value of a housing unit as for the estimation date.

We do appreciate all valuable, both positive and critical, remarks and comments to the Report, expressed in several publications, on internet discussions or in messages addressed directly to authors of the Report. I believe we have made good use of them.

Quality of AMRON Centre’s analyses and reports is determined most of all by the volume and quality of collected data. During last three years, banking and financial sector participants of the System were expanded by property valuators and brokers, who support AMRON database with high-quality data on real estate market transactions. It is worth mentioning that in the period from the first until current issue of the Report, AMRON’s database resources doubled – in November 2009 there were approximately 740 thousand of records, while now (as for October 31, 2012) there are almost 1.36 million of records. Currently, 246 financial institutions uses AMRON System for daily business operations, including National Bank of Poland. AMRON is also available for several public institutions.

Similarly to previous editions, in this issue we present results of the third quarter of 2012 related to the results of few previous quarters. Alarming conclusions unfortunately confirm continuous downward trend that has been observed already for five quarters – both on mortgage loans market and on housing unit transactions market, which is accompanied with further decrease of transaction prices. As far as volume of newly granted loans is concerned, results of third quarter were better than those in previous quarter – in Q3 2012 banks in Poland granted 50 691 loans. It seems that such a result effects from increasing purchasers’ interest in state’s subsidy granted under the “Family on Its Own” programme, which is to be terminated at the end of the year.

While the amount of loans granted in Q3 2012 is slightly higher than in previous quarter, the analysis of the value of newly granted loans prove the systematic diminishing of the total value of newly granted loans, lasting since Q3 2011. In Q3 2012 the total value of new loans portfolio amounted to PLN 10.021 Mio. At the same time, the average amount of the particular granted mortgage loan diminished as well. There is also observed a continuous increase of PLN loans share in the new portfolio – in Q3 2012 it reached the level of 97%.

Correction of the PLN exchange rates to CHF and EUR resulted in stabilisation of the total mortgage loans amount of the whole Polish banking sector at the level of PLN 313 billion (volume of the total mortgage portfolio amounted to 1 704 414 active loans).

Analysis of housing market in Q3 2012 confirmed our previous estimations on significant influence of the new Act on protecting rights of housing unit or single family-house purchasers on the developers market. After large number of constructions started in April, before the date of the Act’s coming into force, in Q3 2012 the number of new housing constructions started decreased by 42%, in relation to the previous quarter. The number of construction permits issued diminished as well – in Q3 2012, the total number of new construction permits amounted to 40 021, while in Q2 2012 there were 49 842 new construction permits, which makes a decrease of almost 25%.

Third quarter of 2012 brought further decline of average prices in all the biggest cities in Poland. The largest decline of the average transaction price of 1 sq. m. of dwelling at the level of 4.8% was noted in Lodz, while the smallest change in the average price – at the level of 0.3% – was recorded in Bialystok. In capital city, the average transaction price declined to PLN 7 303 per sq. m., what means a drop of PLN 74 (in relation to the price level of Q2 2012). Comparison of the current results and the results of the corresponding period of 2011 prove the maximal price decline in Lodz and Katowice agglomeration – with a drop of over 10%. The average housing price in Warsaw diminished by PLN 452 (5.8%), comparing prices noted in Q3 2011 and Q3 2012.

One of the most significant stimulus of the housing prices decline was increase in supply of newly-built housings observable since half-year of 2010, as well as more and more restricted availability of mortgage loans. Considering the commonly shared opinion that the year 2013 will be the moment of Polish economy’s greatest depression, a forecast of continuous, though slower than in the current year, decrease in transaction prices until spring of 2014 is probable. For the same reasons, mortgage results of 2013 may be lower than those of the crisis year 2009, i.e. at the level of PLN 37 – 39 billion. And as far as the prognosis of the final result of the current year is concerned, the estimation of the result of 200 000 granted loans for the total amount of PLN 42 billion (PLN 2 billion lower than estimated a year ago) seems to be justified.

Recently announced new government programme provisionally called „Flat for Youth” will definitively not be a solution for the above pessimistic diagnosis, notwithstanding its final assumptions and implementing date. Without a long-term program of state support for housing development, including a system stimulating households to long-timesaving, it is hard to expect any improvement neither in mortgage lending, nor in housing development in general.

Jacek Furga
Head of AMRON Centre

Download report