The number of new flats sold in six major cities (Warsaw, Krakow, Wrocław, the Tri-City, Poznań and Łódź) reached 58,000 in 2023, up 65% y/y, according to JLL data. In total, developers launched almost 43,000 new flats last year.
The result of almost 58,000 flats sold is not a record, but in a situation of high inflation and high interest rates it can be considered very good. Compared to 2022, sales were therefore as much as 65% higher. Demand received an additional boost in the form of a programme to support first-time home purchases, which led to around 60,000 loan agreements being signed by the end of 2023, of which probably around 35-40% concerned the primary market, with around 10,000 transactions in the largest markets thanks to this. The ‘BK2%’ housing programme was therefore a factor strongly supporting the demand side, additionally mobilising, especially from the second quarter onwards, the remaining groups of buyers to make faster purchase decisions, it was reported.
Sales performance, however, was quite varied in the cities analysed and largely dependent on the supply side. In markets such as Warsaw, Krakow and Wrocław, there was a shortage of supply. Despite this, in the capital city, developers sold more than 19,000 flats in the entire 2023, a result comparable to 2020. In Wrocław, too, the result was similar to the pandemic period – 8.4 thousand units sold. In Kraków, on the other hand, the sales volume was close to 10.3 thousand contracts, which was closer to the level of 2021. (11.2 thousand contracts). The other three cities, where the problem with the number of available flats was not so visible or, on the contrary, the offer was the highest ever (Łódź), achieved very good sales results: 9,000 in the Tricity, 5,300 in Poznań and 5,400 in Łódź, respectively, JLL listed.
With demand recovering rapidly in the past year, supply was not keeping up. This problem did not affect all cities, but in particular the three largest markets of Warsaw, Krakow and Wrocław. The number of flats launched in these three markets throughout 2023 was much lower than annual sales, leading to a situation where the offer at the end of December was at one of the lowest levels, respectively 4,500 in Krakow, 4,500 in Wrocław and 9,800 in Warsaw. In total, in the six largest cities, developers introduced almost 43,000 new flats to the offer, which was more than 14,600 units lower than annual sales. The choice for potential buyers of new flats was thus clearly limited, particularly in the segment of cheaper flats, which were the most sought after in the second half of 2023. The offer counted in total for the six agglomerations shrank to 36,300 units at the end of December. The exception is Łódź, where the number of flats offered for sale at the end of the year was the highest in the history of this market – as many as 6.7 thousand units, JLL further reported
The average prices of flats on offer at the end of Q4 2023 reached new records, starting in Warsaw (PLN 17.3k/m2), in Krakow and the Tri-City – PLN 15.6k/m2 and PLN 15.3k/m2, respectively, in Wrocław reaching almost PLN 14.3k/m2 and in Poznań PLN 12.7k/m2. Even Łódź this time has already clearly exceeded the level of PLN 10 thousand/m2. Compared to Q4 2022, this meant increases in average flat prices, depending on the market, ranging from 14% to almost 22%.
The very end of 2023, i.e. Q4, was slightly weaker in terms of sales than Q3, which saw the peak in loan applications. Developers sold a total of 14,200 units in the six markets, compared to 16,400 units between July and September. A positive surprise in most cities was the quarterly performance of new supply (16,000), which was higher than quarterly sales for the first time since Q3 2022. Only in Wrocław was the number of new units still extremely low (1.3k units), according to JLL data.
“The market data indicate that 2023 will go down in history as a period with exceptionally good sales, which, however, came at some cost. It is most likely that the number of contracts finally signed under the 2% loan will approach 70,000, which will mean that the new government will have to increase the funds for subsidising the loans already granted. This commitment made by the previous government will have to be honoured, which raises the question of whether this will significantly affect any adjustments to the proposed new ‘Mieszkanie na start’ programme to replace ‘BK2’? The assumptions of the current government’s new proposal are quite similar in principle to the previous programme: first-time homebuyers buying flats for their own needs are still to be supported. Modifications include a variation of interest rates from 0% to 1.5%, although the number of potential beneficiaries of the ‘for zero’ offer may be limited. Income limits appear, but they are high enough that they should not limit the group of people who can benefit from the programme. The most significant change compared to ‘BK2’ and at the same time likely to cause further price increases is – in the first draft – the absence of any limit on the price of a flat. On the other hand, the limit on the loan amount for which singles will be eligible for the subsidy is much less favourable, which may cause this particular group to move towards a loan on market terms in large cities. It is worth noting that, according to an analysis of one of the banks with the largest number of applications under ‘BK2’, as many as 61% of applicants were singles,” commented Aleksandra Gawronska, Head of Residential Research at JLL
“In addition, we enter 2024 with a long list of uncertainties and risks, ranging from geopolitics and the situation in Ukraine, the perception of Poland on the international arena as a place for long-term capital investment or assessments of the impact of ‘green’ European policy and its consequences for Poland. Following the discussions on ‘Housing to Start’, we will probably be looking at further housing policy proposals in the coming months. New regulations such as planning reform, changes to technical conditions or issues related to the Developer Guarantee Fund will also affect both the development process and the demand side, concluded the expert.
