“The Polish housing market is marked by contrasting trends – declining flat sales due to high construction and credit costs, but rising new construction fuelled by resumed single-family projects and steady demand.”
The results of the PAB-PCR&F Institute’s monitoring of the housing market indicate that in 2024 and the next two years there will be different trends in housing construction, on the one hand slowing down and on the other accelerating its development.
In 2024 there is:
- on the one hand, a decline in the number of housing units being completed as a result of reduced demand for the purchase of flats offered by developers (caused by double-digit increases in their already high prices) and continued unfavourable credit conditions for their purchase in the form of high-interest mortgages. The decline in apartment sales by developers is also partly due to the expiration of the 2% Safe Credit program, which caused an increase in their sales in 2023.
- and, on the other hand, the increase in the number of apartments for which building permits have been issued and construction of housing starts caused by the “unfreezing” of single-family developments halted in previous years, as well as the launch of new projects by developers triggered by the relatively high rates of return on housing projects and their still satisfactory demand.
The increase in sales of the number of housing starts in individual construction is due to financially competitive options for meeting housing needs compared to buying expensive housing from developers, supported by high real wage growth increasing real household income and their ability to invest in housing.
These above-mentioned positive signals from the housing market after 3 quarters of 2024 give grounds to expect the stagnation in the Polish housing market to be broken, all the more so because of the recent stabilizing trends in price movement and the reduction of strict requirements imposed by banks when granting housing loans.
The continuation of positive growth trends in the housing market in the next few years depends on the positive impact of a number of factors, mainly an increase in the possibility of financing housing construction by households and buyers of flats for rent.
In view of the projected weakening of economic growth in 2025, the high increase in energy prices, the level of inflation (which does not allow interest rates to be lowered and borrowing costs to be reduced) and the assumed sharp increase in the budget deficit for 2025, further development of housing construction may not take place.
The projected high budget deficit and the necessary increase in military spending will strongly limit the Government’s ability to support housing construction in Poland.
Already announced at the end of last year, the new government program “For a start” to support housing construction has not been launched, and it remains unclear when and if it will be launched at all.
What is very important in the context of this program, however, is that it will not have the same impact on the market as the “2% Safe Credit” due to the announced conditions and restrictions. The program is supposed to promote families with three children, rather with lower incomes – so the potential beneficiaries will not be as many as in the case of the previous program. If we select from this group those who really have the need to buy a flat, who can still afford it, then it turns out that the impact of this program on the housing market will certainly be less than greater.
Due to the long delays in the implementation of the National Reconstruction Program, its impact on the housing market will be much smaller than expected, especially since significant funds – about €5 billion – from this program have been earmarked for dealing with losses after the catastrophic flooding as occurred in southwestern Poland in September 2024.
