Emmerson Evalaution does not expect any noticeable drops in home prices in the primary market in the coming months, according to the “Evaluer Index 2022” report. However, it is probable that there will be price opportunities on the secondary market at the turn of the year.
“The decrease in demand resulting from the reduction in the number of credit customers will be compensated in the long term by […] funds and by the developers adjusting the supply to the scale of demand. Despite the decline in demand in the coming months, experts from Emmerson Evalaution do not predict a noticeable decline in home prices on the primary market. that will be effectively limited by record-high cost of production, and emphasize that the chance for a slight correction will be possible next year, when developers want to sell off the last flats from projects started in 2021 and balance the current supply to reduced demand It is likely that at the turn of the year there will be price opportunities on the secondary market, as some people who took out mortgage loans at extremely low rates will want to limit the growing costs of their servicing and will decide to sell the previously purchased apartments “- reads the release on m to the report.
As indicated by the authors of the report, the supply of new apartments is currently quite large, but in the conditions of lower demand than before, a reduction in supply by developers should be taken into account. In particular, if we take into account the growing problems with the costs and availability of building materials as well as the lack of staffing of construction sites with the appropriate number of employees. We can observe this process now, as the number of building permits obtained and investments launched for sale is clearly lower than in the previous year.
“With the observed increase in loan costs, one should take into account that more than half or even two thirds of mortgage-backed purchases may potentially evaporate from the market compared to the previous year. It can be said that real demand and the condition of the market will be determined by cash buyers. In the current situation, we expect investors who buy flats for rent from their own funds to dominate, and the role of PRS funds will also increase, as they will be interested in increasing their shares in the rental market in good times. Therefore, in the next few years, we expect a noticeable increase in the share of PRS in the housing market “- commented the president of Emmerson Evaluation Dariusz Książak, quoted in the material.
The amendment to the Act of September 16, 2011 on the protection of the rights of buyers of a flat or single-family house, which will introduce, inter alia, the obligation to create the so-called Development Guarantee Fund. The funds collected from developers on the DFG account will be used for returns for buyers related to, for example, withdrawal from the contract, declaration of bankruptcy by the developer or bankruptcy of the bank keeping the escrow account of a given investment. This is a factor that will further increase the cost of the developer, we read on.
The company reminds that in 2021 housing prices in the largest markets grew at a double-digit pace, breaking all records so far.
As the study shows, Sopot saw the biggest jump in prices from year to year, where new flats increased by 29%. It is a specific market, where the limited space and the lack of land as well as the prestige of the location result in very expensive investments. However, Sopot was not the only city to record over 20% increases in the primary market. 23 percent the increase in prices was visible in Gdynia, Katowice, Gorzów Wielkopolski and Zielona Góra. Łódź also found itself in the forefront of the fastest-growing cities with a 19% increase in rates.
The already mentioned Sopot remains the most expensive, with the median price per m2 at the level of 21.5 thousand. zloty. The second place is traditionally held by Warsaw (PLN 12.3 thousand / m2), and the third place for Gdynia (PLN 11.8 thousand / m2) was replaced by Kraków (PLN 11.3 thousand), which was fourth in 2021. Among the 21 analyzed markets, the cheapest premises in the developers’ offer could be found in Gorzów Wielkopolski (PLN 5,800 / m2).
Record high price increases were also present on the secondary market. In none of the locations described in the report they were lower than 12%. Their highest jump was again visible in Sopot (26%). The rates in Wrocław, Gdańsk and Łódź also increased by over 1/5, and Katowice and Kraków were also close to exceeding this threshold. Buyers paid the most per m2 for apartments in Sopot (the median price was almost PLN 13,000). Similarly to the primary market, the second largest city was the capital (PLN 11,400 m2). After that the median prices per m2 for Gdańsk and Kraków were at a similar level (almost PLN 9.6 thousand each). Sellers from cities within the Silesian Agglomeration and Gorzów Wielkopolski (for both PLN 4.5 thousand / m2) had the cheapest price.
For comparison, in 2020, price increases mainly amounted to several percent, with maximum gusts of up to 13% in the case of the primary market, not exceeding 10% for second-hand apartments.
Emmerson Evaluation provides residential and commercial real estate appraisal services. The services are directed primarily to banks, housing and commercial developers, investment funds and listed companies.
Evaluer is a company that provides services in the field of sharing the EVALUER Transaction Database and analytical reports on various segments of the real estate market.
Source: Emmerson Evalaution and ISBnews
