To what extent does the greater availability of credit translate into demand for housing? Has investor interest in residential projects for institutional rent increased after the interest rate cut? How does the change in the credit market affect companies’ investment plans? Are developers planning to invest in suburban and outer city neighborhoods to expand the group of apartment buyers due to lower prices?
Zuzanna Należyta, commercial director at Eco Classic:
Any reduction in interest rates has a positive effect on the demand for mortgages, and thus on the purchase of apartments. In the case of our investments, about 50 percent of transactions are carried out with the support of a mortgage. We estimate that as prices rise, this percentage will increase. Thus, any reduction in mortgage rates has a stimulating effect on demand.
The recent rate cut was significant, but it is difficult to assess how much of its size was dictated by the upcoming elections. Therefore, it is to be expected that after the elections the pace of reductions will be reduced. In such a situation, it is difficult to make decisions on launching new investments when it is uncertain whether customers will be able to obtain credit.
Angelika Kliś, Atal board member:
A lower interest rate theoretically means a lower cost of credit for the purchase of apartments, but also better creditworthiness, so good news for developers and those of their clients who cannot take advantage of the preferential rates of the BK 2% program. However, despite the MPC’s rate cut, the current interest rate is still relatively high when compared with that of 2-3 years ago.
We have been observing increased interest from clients associated with the institutional rental market since spring, while we are not active in this sector. Although the market outlook has recently improved, as a large developer we do not act impulsively. We are consistently executing our plan for this year and introducing new projects. Since we design our investments for different groups of buyers, our portfolio includes those located in the suburbs. Among other things, it is mainly families who are looking for apartments in them due to their greater affordability.
Małgorzata Ostrowska, director of the Marketing and Sales Division at J.W. Construction:
For the moment, we are seeing positive aspects of the recent reduction in interest rates, as well as more available credit. Young people looking for their first apartment have returned to the market, although we also notice slightly older people among the beneficiaries of the 2% loan. Customers who had been holding off on a purchase decision, hoping for a stabilization of the economic situation and less restrictive loan terms, have also returned. Seeing the dwindling supply and rising prices, they are increasingly willing to sign purchase contracts.
As for those buying real estate for investment purposes, we have not noticed significant changes in this group. Investors are active practically all the time. They are mainly people buying premises for cash, most willingly those with the possibility of deducting VAT at 23 percent. These purchases are favored by the approaching end of the year, which accelerates decisions due to the desire to optimize taxes. And we are talking about sizable sums, even in the amount of PLN 150,000.
Joanna Chojecka, sales and marketing director for Warsaw and Wrocław at Robyg Group:
Such a reduction in interest rates may be a minimal relief for those paying off current loans, but it is not a stimulator of demand in the residential real estate market. It’s still a very high interest rate that hinders the availability of housing financing. That’s why it’s much more important to have government programs that facilitate the purchase of one’s home – like the current 2% Safe Credit. Such programs should be a permanent element of state policy, as they ultimately have a positive impact on the country’s GDP, increase citizens’ sense of security and support family-friendly policies.
Andrzej Gutowski, vice president, sales director of Ronson Development:
The reduction in interest rates is pro-demand and, from the point of view of the real estate market, is good news, both for customers and developers, because it will stimulate more groups of people who want to buy an apartment, increase interest in mortgages and strengthen the desire to invest in the real estate market. We are seeing a revival of customers who have so far postponed their purchase decision for various reasons, while they are not recipients of the 2% Safe Credit program. The question of whether the rate cut will be permanent, and thus affect the market in the long term, is not insignificant.
There has been so much interest in our sales offerings that we have decided to put one of the stages of the Ursus Central project, intended for institutional rentals, on regular sale, and have thus postponed our PRS plans until next year.
The company’s investment assumptions are the result of a long-term strategy, and we do not depend on subsequent programs. Later this year, we will launch the next stage of the Nowe Warzymice project in Szczecin and the brand new Zielono Mi project in Lower Mokotow in Warsaw. We also have completely new projects and launches ahead of us, including in the suburbs of agglomerations, as exemplified by the next stage of the Eko Falenty project near Warsaw.
Mariola Żak, sales and marketing director at Aurec Home:
Compared to a year ago, today apartment sales are almost three times higher and loan demand is four times higher. This is the result of, among other things: lowering interest rates, thanks to which mortgage installments are lower by up to several hundred zlotys. However, the reduction in interest rates is unlikely to have that much of an impact on those planning to buy their own M in the near future. After all, the mortgage market is dominated by the 2% Safe Credit program, which guarantees a fixed mortgage installment with an interest rate of 2% for the first 10 years of repayment. Thanks to it, borrowers can save a lot, especially compared to standard mortgage offers, even after the interest rate cut. By the end of August this year, more than 41,000 applications had been submitted for BK 2 percent and nearly 6,000 loan agreements had been signed for a total of nearly PLN 2.16 billion.
Dawid Wrona, board member at Archicom:
Given the current market turmoil, every developer is faced with the dilemma of choosing between faster construction in response to growing demand or restraint and a sensible approach to launching new developments and setting pricing policies.
It is important to be aware that the process of bringing investments to market has lengthened from 2-3 years to as long as 5-7 years, and the success of a project is by no means guaranteed. We specialize in large, city-building projects, which involves freezing capital of 150-200 million for many years. Therefore, in my opinion, launching further investments should be approached head-on, based on market analysis, but also taking into account macroeconomic factors. With that said, it becomes an additional challenge to create a product that meets the needs of buyers in the long term.
The 2% Safe Loan influences the market in the short term and is aimed at specific individuals. As for the company’s plans for the coming years, within 2-3 years, we plan to build and sell nearly 8,000 apartments. The launch of several new investments will already take place in the current half-year. We are present in the country’s largest markets and do not rule out expansion. We are setting our sights on the Silesian Agglomeration or the Tri-City, among others.
Source: The poll was prepared by real estate website dompress.pl
Photo: Eko Falenty – Ronson
