The growth rate of home prices on the primary market will decrease to 9.8% y / y on average this year, compared to 11.1% in 2021, analysts at Credit Agricole Bank Polska forecast. In 2023, they forecast a slowdown in the growth of housing prices to 7.8% y / y, and in the years 2024-2025 a stabilization of price dynamics at the level of 8.3%.
In order to prepare an update of the housing price forecast (as compared to the edition of July last year), they assumed that in the forecast horizon (2025), the LFS unemployment rate would be around 3%. This tendency will result, among others, from from the expected by us acceleration of economic growth related to the cycle in the absorption of EU funds, including the launch of KPO.
In our forecast, we assume that the growth rate of construction materials prices will accelerate in Q2 this year to approx. 40% y / y against 28.3% in Q1. We assume that in 2023 the annual dynamics of commodity prices will stabilize close to zero due to the high base effects of 2022 and weaker demand for housing purchases related to the high level of interest rates In the years 2024-2025, we will return to the long-term trend of a slight increase in material prices (by approx. 2% per year), reads the weekly report.
Taking into account the results of the expert-adjusted modeling, Credit Agricole forecasts that the growth rate of home prices in the primary market would decrease to 9.8% y / y on average this year. compared to 11.1% in 2021
The expert correction takes into account factors not included in the model specification. These include the decline in cash demand, the slowdown in lending due to the KNF recommendation (calculation of creditworthiness assuming an increase in interest rates by 5 percentage points), the likely reduction of relatively high margins by developers in sales and the sale of cheaper flats). In 2023 we predict a slowdown in the growth of housing prices to 7.8% y / y, and in the years 2024-2025 stabilization of price dynamics at the level of 8.3%.
This means that the average transaction price in the above-mentioned seven cities will increase from 9.6 thousand. PLN on average annually in 2021 to 10.5 thousand. annually in 2022, 11.3 thous. PLN in 2023, and then it will increase by another thousand PLN in 2024 and 2025. Compared to the previous forecast, the path of the dynamics of housing prices has been revised upwards by approx. 1.2 percentage points. percent in the years 2022-2023, which is the result of a significantly higher starting point of the forecast and taking into account the supply side (housing construction costs) in the model specification.
It should be noted that this is a conditional forecast, dependent on the materialization of the scenario for the explanatory variables outlined above. The factors of uncertainty for our forecast are the strength of the impact of higher interest rates on housing demand and their prices, with the possible reduction of housing supply by developers. Scale of impact. Due to the war in Ukraine, the situation on the housing market is difficult to precisely estimate. The outflow of Ukrainians hitherto employed in Poland (often in the construction industry) will contribute to an increase in housing construction prices, and at the same time the influx of new refugees will increase the demand for housing, according to the report.
Source: Credit Agricole and ISBnews
