AMRON-SARFiN Report 3/2016

The results of banks’ lending activity in Q3 2016 confirmed opinion presented in previous editions of the Report that race of potential borrowers to benefit from funds of the ‘Flat for Youth’ Programme was the basic reason for the high lending results in the first two quarters of this year. When subsidies expired, the highest decline in number of loans (quarter to quarter) over last 5 years was recorded. Number of new loans granted in Q3 2016 declined by 13.20% in comparison to the previous quarter, while value of newly granted loans diminished by 8.78%. Despite that, the overall results of first three quarters of 2016 were slightly better than the results of the same period last year and therefore the repetition of last year’s lending results may be expected.

The share of non-performing housing loans in the mortgage portfolio in Q3 2016 remained at the level of the previous quarter and amounted to 2.90%, i.e. less by 0.29 p.p. than in Q3 2015. At the end of September this year, PLN loans with default on payments amounted to 2.61% of all housing loans granted in domestic currency, which meant slow but constant quality improvement. Both quarterly and yearly, a slight increase in number of non-performing housing loans in foreign currencies was noticeable. This was largely the effect of the ‘historical’ portfolio, which quality does not improve, as it is noted in segment of PLN loans. In analysed period, 3.32% of all denominated housing loans were qualified for the risk group.

Analysing the geographical structure of loans brings the conclusion that such a large decline in number of loans granted in the third quarter resulted from the weakening mortgage sales in Warsaw. In the previous Report, I expressed concern about continuous increase of Warsaw share in the total structure of new loans, however, in the last quarter there has been noted a significant change in this trend. The share of Warsaw in the structure of new loans significantly decreased for the first time in several years – by 3.87 p.p. Thus, loans granted in the capital city in Q3 2016 amounted to 39.40%. This also translated into weaker sales on the primary market – by 6.3% in comparison to the previous quarter.

In the period from July to September 2016, Polish real estate sector recorded slightly weaker results than in the previous record-breaking quarters. Despite the fact that developers completed 7% more dwellings, the number of constructions started was lower by 22% and the number of construction permits issued – lower by 5% compared to previous quarter.

Nonetheless, a slight increase in transaction prices in the largest Polish cities was continued. In Q3 2016, decrease in the average transaction price per 1 sqm. of floor area of dwelling was recorded in only two out of eight surveyed locations, i.e. in Cracow and Katowice agglomeration. In Wroclaw and Bialystok, the average price did not change significantly, while in other cities an increase in the average price of dwelling was noted – in Warsaw by PLN 148 /sqm., in Gdansk by PLN 137 /sqm., in Lodz by PLN 93 /sqm. and in Poznan by PLN 60 /sqm.

Jacek Furga,Ph.D.
Head of AMRON Centre

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