AMRON-SARFiN Report 3/2015

On the occasion of the Jubilee – as you read the 25th issue of the AMRON-SARFiN Report – I would like to thank all Readers and Recipients of our Report. Both those, who accompanied us from the very beginning and those, who joined us later. It is thanks to all of you, thanks to your opinions and suggestions, the quarterly publication of the Report became the permanent feature in the calendar of all active participants, observers and analysts of Polish housing market. What makes the Report reliable and attractive, is the quality and consistent growth of both databases – AMRON database increased from 740 thousand information at the end of 2009 up to 2.35 million records as for the end of October 2015.

For six years we have been quarterly providing you with update information on mortgage loans and housing transaction prices. In the period analysed in the following issues of the Report, i.e. since Q3 2009, banks in Poland granted 1 247 322 mortgage loans for the total value of PLN 261 billion. However, the number of active loans increased only by 600 thousand of loans and value of the total mortgage loans portfolio grew by PLN 166 billon. In the same time, 1 046 285 permits for housing construction were issued and 893 358 housing units were completed. Interest rate of a mortgage loan diminished from 7% to 3.5% and the decrease of the nominal housing transaction prices ranged from 2.48% (i.e. PLN 190 per square meter) in Warsaw to 8.83% (i.e. PLN 512 per square meter ) in Gdansk.

It would seem that such favourable conditions were conductive to increase in mortgage lending. Such was the impression after analysis of Q2 2015 results, in particular in scope of the unexpected, unprecedented since last few quarters increase in mortgage loans sale. Last quarter I advised not to celebrate the reversal of the downward trend. Results of mortgage lending in Q3 2015 turned out to be lower than those recorded in Q2, both in terms of value of new loans (by 3.52%) and volume of those loans (by 5.50%). Banks granted 43 945 new housing loans of the total value of PLN 9.704 billion. It is however possible that the final result of the year 2015 may be slightly better than the result of the year 2014, at least from the new loans value perspective – value of new loans portfolio is likely to reach the level of PLN 38 billion. Unfortunately, it seems that the volume barrier of 180 thousand of new loans will be difficult to overcome.

It is hard to expect mortgage lending to dynamically increase in 2016. Lack of saving instruments for systematic downpayment collecting – in 2016 on the obligatory level of 15% – results in more favourable banks’ offers for affluent families, which have actually fulfilled their housing needs in previous years. At present, those most wealthy purchasers buy another housing for rent. Within those 6 analysed years, share of Warsaw citizens in total number of mortgage borrowers increased from 28.9% in Q3 2009 up to nearly 37.% in Q2 2015, when it reached its maximum (in our researches’ history) level. Analysis of the new loans portfolio in terms of LtV ratio and loan period confirms banks’ adaptation to requirements defined in Recommendation S.

Developers still have reasons to be optimistic. Q3 this year was the following period of increases on housing market, in both developers and private sectors. Comparing to the previous quarter, the greatest increase (by 16%) was recorded in number of completed housing units, which amounted to 37 529. From July to September of 2015, there were issued 51 673 construction permits, which is 3% more than in Q2 2015. The only decrease (but insignificant – only by 2%) was recorded in number of constructions started, which in Q3 2015 amounted to 47 749.

Such developers’ activity results in stabilisation of the transaction prices in all surveyed cities. Only on two out of eight monitored markets the prices slightly diminished comparing to previous quarter – in Katowice agglomeration by PLN 24 per square meter and in Lodz by PLN 12 per square meter. The other markets recorded small increases – the biggest in Warsaw, where the average price of a square meter of a dwelling amounted to PLN 7 463, i.e. PLN 109 more than in Q2 2015. Relating to Q3 of the previous year, the average price of a square meter decreased only in Gdansk (by PLN 154 per square meter). In Katowice agglomeration the average transaction price remained unchanged, while in other seven locations it increased – the most significant increase was recorded in Warsaw and Wroclaw, respectively by PLN 201 per square meter and PLN 185 per square meter.

Availability of loans, including mortgage loans, as well as scale of housing market finance, will be determined most of all by laws passed by newly elected Parliament and decisions of the new government. First assembly of the Parliament of its new term proved that it is possible to pass all three parliamentary readings of the draft law in one working day. If only the act on saving-building banks was passed in this rate, first savers would appear already in 2016. Comparative analysis of the saving-building banks development in Czech Republic, Slovakia and Hungary justifies the estimation of at least 500 thousand of new saving contacts in Poland. It means that after 3 years form launching this system in Poland, volume of savers could exceed the current volume of mortgage borrowers amounting to 1 965 thousand.

Jacek Furga
Head of AMRON Centre

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