AMRON-SARFiN Report 4/2013

I shall not escalate the tension with longish introduction and I will reveal the facts at the very beginning. It was the weakest year for mortgage business since 2005. Both volume of loans granted in 2013 (176 thousand) and its value (PLN 36.5 billion) were lower than the volume and value of loans granted in the crisis year 2009 (respectively 189 thousand of loans of the total value of PLN 39 billion). Neither unusually low interest rates, nor attractive prices, which seemed to reach its minimal levels in most of locations, were not attractive enough to encourage potential purchasers to take out a long-term mortgage loan. Even such an incentive as amended Recommendation S, which limited loans with LtV ratio at the level of 100% after January 1, 2014, did not work out. Transactions on housing markets were concluded by those purchasers, who disposed cash or who withdrew savings from banks deposits or other financial instruments and invested it in real estate. It resulted with significant developers’ sales volume, comparable with results noted in record-breaking first quarter of 2007. At the same time, however, number of construction permits issued in 2013, as well as number of constructions started in 2013 were over 10% lower than in previous year, which seems to be a not quite good prognosis for the nearest future.

In second half-year of 2013, the downward trend on housing transactions market finished. After five years of constant decrease in average housing prices in the major Polish cities, at the end of 2013 the average transaction prices in all agglomerations analysed by AMRON Centre were higher than a year ago. As far as Katowice, Bialystok or Lodz is concerned, the increase was marginal – from PLN 11 to 61 per square meter, but at the same time in Gdansk and Cracow appreciation of prices exceeded PLN 200 per square meter. Analysis of changes in housing prices within last quarters proves that on most of analysed markets prices reached their minimal levels and it seems that in next several quarters we shall witness slights fluctuations up and down until the market’s clear increase impulse. New governmental Programme “Flat for Youth” will definitively not be such an impulse. At least not in the current shape. Obligatory borrower’s down-payment in the amount of min. 5% of the housing value binding since January 1, 2014 will not support the market’s development as well.

With no satisfaction I may refer to my introduction to the AMRON-SARFiN Report 4/2012, where I predicted that there was no chance for improvement on housing market in few next years’ perspective if government did not start act efficiently and if parliament did not take wise decisions, taken above the particular interests of political parties. We wasted that year!

Polish Banks Association has consequently, since several years, submitted to government and parliament the assessment of current situation supplemented with concrete solutions, particularly in scope of programme of flats for rent and supporting the saving system for housing purposes. Propositions of the long-term housing programme for different social groups was submitted to heads of particular ministries, nominated within the recent reconstruction of Polish government.

Jacek Furga
Head of AMRON Centre

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