AMRON-SARFiN Report 4/2024

Throughout 2024, the housing and loan markets were marked by a certain level of tension and anticipation for the new loan for 0% announced during the 2023 election campaign and later confirmed at the beginning of 2024 as ‘Loan for Start’ programme. This uncertainty affected potential beneficiaries of the programme, who delayed their decisions to take out a housing loan and purchase an apartment, as well as homeowners on secondary market, who maintained high offer prices in anticipation of another wave of buyers benefiting from the government support. Developers also hesitated in launching new investments, despite having obtained building permits. It’s a pity that it took 12 months for the government to announce in December 2024 that this programme would not be implemented.

In the first quarter of 2024, banks focused on finalizing mortgage applications under ‘2% Safe Loan’ programme submitted in 2023. These applications had a significant impact on the lending volume in the first quarter, with nearly 65 thousand mortgage agreements concluded. However, more encouraging was the stable and consistent lending volume in the following three quarters, after the market fully adjusted to the phasing out of ‘2% Safe Loan’. During this period, approximately 45 thousand mortgage loans were granted per quarter, resulting in an annual total of around 180 thousand loans. More than a decade ago, the AMRON Centre introduced the concept of the ‘organic level of mortgage lending’ in the Polish banking sector. Between 2012 and 2017, Polish banks consistently granted approx. 180 thousand new housing loans annually, regardless of government subsidies.

Ultimately, the banking sector closed 2024 with a very strong result, granting over 202 thousand loans of a total value exceeding PLN 85.1 billion. It was really close to surpassing the record-breaking volume of mortgage lending from 2021, when 256 thousand loans were granted amounting to PLN 85.8 billion in total. Regarding the number of loans granted, the result achieved by banks in 2024 can be considered highly satisfactory. These high lending volumes were driven by a systematic increase in the average mortgage loan value, which reached PLN 427 thousand by the end of 2024.

Despite the increase in the number of mortgages granted in 2024, the downward trend in the total number of active mortgage loans, observed since late 2021, could not be reversed. The number of active housing loan agreements in Poland at the end of 2024 amounted to 2.240 million, while the overall mortgage debt amounted to PLN 495 billion. This meant a decline in the number of active loans by over 12%, or nominally by 308 thousand loans, compared to the peak recorded at the end of 2021. In other words, more mortgages continue to be repaid than new ones were granted.

Developers also had no reason to complain in 2024. Although, according to JLL, they sold 39 600 apartments in Poland’s six largest metropolitan areas in the past year, compared to 57 600 in the heated market of 2023. This represents decrease by 31% in annual sales on major markets. Despite this, developers’ activity did not decline. In 2024, developers started construction of over 152 thousand new apartments, marking an increase by 33% compared to the previous year. At the same time, they completed only 124 thousand apartments, which was by 9% less than in 2023, and the number of obtained construction permits reached 205 thousand, what meant an increase by 27%.

In 2024, developers were rebuilding their offer. At the end of 2024, 55 800 apartments were available on the primary market on Poland’s seven largest markets, which was over 20 thousand more compared to the previous year. The supply on the secondary market looks equally attractive. According to Unirepo data, in mid-January 2025, over 74 thousand unique offers were available in provincial cities – one-third more than a year earlier.

Regarding developers’ offers, it is worth noting the announcement by the Minister of Funds and Regional Policy, Katarzyna Pełczyńska-Nałęcz, about preparing a parliamentary draft bill forcing developers to publish their prices.

Meanwhile, at the Ministry of Development and Technology, 2024 was marked, among other things, by work on the construction of the Housing Transaction Data Portal (Portal DOM). In connection with this project, the Polish Banks Association submitted a proposal to use the banking sector’s experience in creating a nationwide real estate database, including the potential use of certain functionalities of the AMRON System. We are convinced that using our over 20 years of experience in this project, as well as the resources and functionalities of the AMRON System, could significantly accelerate the implementation of the Portal DOM while reducing the associated public expenditure.

Growth dynamics of transactional prices per square meter of apartments significantly slowed down in the second half of 2024. While in the third quarter of 2023, quarterly price increases in Poland’s six largest cities ranged from 7.91% to 9.32%, a year later they were at the level from 1.89% to 3.01%. However, on an annual basis, price growth remained high due to the impact of the ‘2% Safe Loan’ programme launched in mid-2023. In the fourth quarter of 2024, average price in Cracow increased by 19.46%, in Wroclaw – by 14.92%, and in Poznan – by 13.82%. In Warsaw, the increase amounted to ‘only’ 11.62%, while in Gdansk – 11.32%.

In 2024, housing buyers expanded their purchasing activities beyond the largest cities to smaller regional markets, where low supply led to higher annual price increases than in major metropolitan areas: 15.92% in Rzeszów, 14.88% in Kielce, 14.76% in Opole, 14.13% in Sosnowiec, 14.93% in Torun, and 14.32% in Gorzow Wielkopolski. These markets were gaining popularity due to relatively lower prices, improving infrastructure and growing employment opportunities. Once considered marginal, these locations were becoming attractive investment destinations, especially in the rental segment.

Meanwhile, annual rent rate increases at the end of 2024 were symbolic in some markets. In Gdansk and Cracow, rent rates increased by 0.7%, while in Wroclaw a slight decrease by 0.34% was noted. In Warsaw, the average rent increased by 2.52%, while the highest growth was recorded in Lodz (+5.60%) and Katowice (+4.35%).

Recommended actions for 2025

The first year of the new government coalition has unfortunately not brought any noticeable changes, ideas or regulations in the area of supporting the development of housing construction. Two weeks ago, on February 13, 2025, we learned the assumptions of the new housing programme presented by the Minister of Development and Technology, but the provided information was very general and the Minister himself noted that it may undergo far-reaching changes during the legislative process. However, the presentation of these assumptions has sparked considerable debate. Initial statements from representatives of the Ministry of Development and Technology indicate that developers will be excluded from the programme’s provisions. Loan subsidy will only be available for purchasers of apartments on the secondary market, while price limits will exclude properties in the largest cities. Moreover, only those who have not previously owned an apartment will be eligible for mortgage subsidies, meaning that large families will be excluded from support. The ‘Housing Key’ programme, if implemented, will not take effect until the end of this year (currently projected for October 2025). The announcement of such a preliminary concept appears to be primarily an element of the election campaign aimed at demonstrating the government’s initiative, though its real effectiveness remains uncertain. Polish Banks Association will certainly fully engage in the consultation process regarding the specific instruments of this programme.

In the meantime, I will once again recommend actions that I have repeatedly mentioned in various publications and conference presentations.

The primary challenge for the government is to take steps to strengthen the supply of new housing, and a key issue in this matter is to unlock developers’ access to land suitable for residential construction, currently owned by local governments or state-owned companies. I hope that the recent changes in the management of the National Property Resource (KZN) will facilitate this process.

An amendment to the Tenant Protection Act, introducing a balance of rights and obligations between landlords and tenants, would help increase the supply of rental housing units. It is unacceptable that a tenant who does not pay rent or even damages the apartment is literally impossible to evict. This is one of the major barriers to the development of private rental housing.

The Housing Savings Account, introduced alongside the ‘2% Safe Loan’ programme, was a step in the right direction toward building savings. However, the fact that only 5 thousand accounts have been opened over a year and a half showed that it failed to attract savers for housing purposes. In contrast, millions of citizens in neighbouring countries participate in the savings and building societies proposed by the Polish Banks Association, which has the necessary expertise in this area.

At the same time, the mortgage bond market, which has been developing for over 25 years, should be furtherly strengthened. The increase in the number and volume of mortgage bonds in 2024 confirms the positive impact of the long-term funding ratio introduced by the Polish Financial Supervision Authority.

Another crucial issue is defining the target model for mortgage lending in Poland. Following the example of other EU countries, we should consistently work toward fixed-rate mortgage loans. I am personally convinced of this. Within the Employers’ Housing Forum, in which the Polish Banks Association has participated for over two years, a proposal for a fixed-rate mortgage loan at 5% for the entire loan term has been developed, supported by a mechanism, in which the public sector (NBP or BGK) provides appropriate interest rate swap transactions.

The recommendation-worthy initiative is also the launch of REIT funds in Poland. Confidential negotiations regarding the future law have been ongoing in ministerial offices for over a year, but this topic has been discussed for many years. It is time for decisions! REITs could generate a stable funding stream for residential investments, including stimulating the construction of rental housing.

The topic of rental housing, both in the commercial and social sectors, with the participation of private investors, PRS funds, as well as TBS and municipal housing, deserves a separate publication. It is encouraging that the ‘Housing Key’ programme includes support for social housing development within social housing associations (TBS), social housing initiatives (SIM) or housing cooperatives (SM). However, these funds should not be used to cover tenants’ participation fees!

A particularly important aspect that needs attention is education as part of housing policy. Although the Year of Economic Education has passed, broad consumer education is still essential. This includes informing people about different ways to meet housing needs, mortgage loans principles and phenomena occurring on the housing market. This is necessary given the persistent disinformation spread by various media, which repeatedly claim an impending housing bubble, a market collapse or accuse banks and developers of excessive profiteering at the expense of homebuyers.

The key educational objective should be to make young people aware that owning an apartment is not a prerequisite for normal functioning in society and that renting is not synonymous with failure. However, such education must be accompanied by development of a sufficient supply of rental housing.

Another crucial educational area is raising awareness among customers about the benefits and importance of sustainable construction and energy-efficient investments. It is important to prove that energy-efficient solutions lead to long-term savings in apartment maintenance costs.

A fundamental issue – not only for the banking sector – is reversing the growing trend of government institutions undermining long-term agreements between consumers and banks. This constitutes the greatest threat to the stability of Poland’s financial system. It is the government’s responsibility to stop this process.

Residential construction can and should be used, as in other countries, as one of the most effective economic growth engines. The government should therefore support both demand and supply on the housing market. We can certainly afford a higher level of budget spendings in this area – it simply makes economic sense. It is already well-documented that as much as 37% of the price paid to a developer for an apartment goes to the state budget in the form of various fees and taxes. This raises an obvious question: why not implement a simple, transparent and attractive tax relief for those investing in rental properties?

We are ready to discuss effective solutions for the development of housing in Poland. Everything has already been invented – it is just a matter of knowing how to combine these ideas into a long-term housing programme rather than starting by handing out money, especially to those who do not need it.

The year 2025 will be a year of ‘normality’ on the housing and mortgage markets. Rising wages and expected interest rate cuts by the National Bank of Poland are the future outlined by current forecasts. This means that Poles will be able to afford further housing purchases, both to meet their own housing needs and for rental purposes. We need a stable legal environment and some encouragement and approval for such actions. It will also be a time of waiting for new stimuli that could revive purchasing activity and influence investors’ and individual buyers’ actions.

Jacek Furga,Ph.D.
Head of AMRON Centre

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