Cheaper apartment prices only in 2019?
Apartment prices in Poland are expected to grow throughout the year, and the construction industry expects a rebound only in mid-2019. The costs of work and materials are about to raise rates for 1 square meter for about 10 percent. The unsatisfied demand for housing and consolidation that attracts investors of small scale is also connected with this phenomenon.
In total, the urban.one real estate prices rose slightly from month to month. Comparing with last year, prices are statistically higher by 1 point and prices of plots - even by more than 3 points.
At the end of 2017 prices of apartments are stable. This year prices will be more expensive.
The housing price in Poland index readings for Poland in general raised to 96.25 points in December 2017. It is only 0.1 point more than in November, but already 1.5 points more than the same period in 2016. Smaller fluctuations occurred in the housing price index in the group of large cities (Kraków, Poznań, Wrocław, Gdańsk, Gdynia and Łódź) - in December its value raised to 95.37 points, which is 0.07 point more than November and 0.27 point more than December 2016.
Major changes took place in Warsaw. The housing price in Poland index for the capital raised to 94.11 points in December (by 0.46 point less comparing to November). Despite a slight decrease in the month-to-month relation, prices are still higher than a year before by almost 1 point.
Industry representatives are already talking about price increases. Before December, there were announcements of a 5% price increase, now some developers estimate them to raise around 10%. - Along with the dramatic increase in construction prices and land for development in 2017, housing price increases must come. So far, they has been quite timid, hidden under the guise of the "zero price negotiations". Meanwhile, a 30% increase in construction costs means that housing prices in new projects must increase by at least 10% by the end of this year.
These increases may limit market demand and ultimately contribute to a fall in prices. However, the market does not expect it to happen earlier than the second half of 2019. It will also be influenced by the decision to raise the Monetary Policy Council rates, which will raise mortgage rates.
Demand for apartments will certainly last until the end of this year. This snowball in the real estate market will probably start growing until the second quarter of 2018. In the next few quarters, developers may already start to make the prices more realistic with new calculations. On the other hand, low interest rates - if they remain at the current level - will continue to affect the sales results.
Despite the expected price increases, more than half (about 60%) of respondents in the study about the report on transaction prices of apartments predicts that the economic conditions will continue in the next six months in each of the analyzed markets. 1/3 of them, however, expects their improvement.
Another month of buying cheap land
Slight decreases, for the next month in a row, were recorded in the case of land prices for development. The price index raised to be 125.34 points – it’s 0.57 points less than in November. These are the only two months of reductions in 2017 in such surveys. However, it is still at 3.34 points more than a year ago.
Respondents, however, have less optimistic forecasts for the next six months than the forecast of housing market. 55 percent the respondents expect to maintain current economic conditions, and 15% of them predict it would be worse. Only every 1 in 10 participant of the study sees a chance to improve them.