AMRON-SARFiN Report 3/2018
According to declarations and signals coming from the developers’ sector, the primary market is stabilizing (read: decelerating). This was not jet confirmed by GUS data, which does not signal the reversal of the upward trend in housing investments for now. Although in relation to the previous quarter, the number of constructions started by developers decreased by almost 5% and the number of issued construction permits by 8%, but in relation year-to-year, both indicators showed an increase by over 30%. The results of the first three quarters of this year suggest that 2018 may be another record-breaking period in the construction activity of developers’ sector.
Banks have also signalled tightening the mortgage lending criteria, but the sale of housing loans recorded in the first three quarters of 2018 at 85-90% of the previous year’s result allow to forecast that a record-breaking results of mortgage lending in 2018 will be announced in the next few weeks. After 8 years, the number of newly granted loans will exceed 200 thousand, while total amount of new loans will reach the level of PLN 50 billion – this level has not been recorded for 10 years, i.e. since the beginning of the subprime crisis.
The average value of a housing loan was systematically increasing and in the third quarter this year it exceeded PLN 260 thousand. On one hand, good macroeconomic conditions in Polish economy and rising wages were conducive to higher loans amounts , but on the other hand this phenomenon has been forced by constant increase in housing prices and growing demand for larger floor area of dwellings. However, increases in housing prices were forced by fast-increasing prices of building materials and construction plots and, above all, higher labour costs in the construction sector. All this was driven by increased housing supply responding high demand , favoured by low-cost mortgage loans. And the whole system of gear wheels has been working well, with no hiccups so far. All gear wheels rotate in the right direction. However, there is a question whether this system will start slowing down in the same harmonically way or one of the modules will suddenly stop and the others will break down?
The anxiety of some analysts was caused by the fact that the transaction prices of dwellings on primary market returned to the level from before the subprime crisis. The rate of prices increase was high especially in the last year. Comparing to Q3 2017, in all analysed locations an increase in the average transaction price of 1 sq.m. of floor area was noted – from almost 13% in Gdansk, through 9% in Katowice agglomeration, to 6% in Wroclaw. The rent rates for dwellings also increased. The biggest changes in the last 12 months were recorded in Warsaw (an increase by 10.07%), Gdansk (by 11.90%) and Lodz (by 12.79%). In other cities, rents increased by approx. 4%. However, the market in general seems to be optimistic. Poles supported with mortgage loans or cash, successfully implement the informal programme ‘Flat for rent’, introducing new apartments on the market.
The number of taxpayers offering at least one dwelling for rent increased from 532 thousand in 2013 to 611 thousand in 2015. According to the estimations by the Polish Residential Landlords’ Association ‘Mieszkanicznik’, this number currently exceeds 650 thousand people. The number of people earning only rental income has also been growing rapidly – in 2013 it amounted to 25 thousand people, and currently exceeds 50 thousand. It’s hard to be surprised. According to the monitoring of the AMRON Centre, rent rates were increasing in the last 4 years much faster than the transaction prices of flats.
Jacek Furga,Ph.D.
Head of AMRON Centre
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