After the slowdown in activity on the housing market caused by the effects of the COVID-19 pandemic, this activity returned to high levels in the first quarter of this year, assesses the National Bank of Poland (NBP) in “Information on housing prices and the situation on the residential and commercial real estate market in Poland in the first quarter of 2021.”
“The number of housing contracts sold on the largest primary markets was significantly higher than in the previous quarter, but annual sales are still lower than in 2017-2019. The construction costs of apartments (materials and labor) grew at a slightly slower pace than in the previous Land prices continued to increase, which was related to the replenishment of ‘land banks’ by developers. In Q1 2021, a record number of flats were commissioned again, which was the result of developers’ activity in previous years. A y / y increase in average prices was observed of transactional m2 of apartments in the primary and secondary market of the analyzed cities,” according to the NBP report.
In the period under review, according to data collected by the NBP, increases in housing prices q / q in almost all groups of markets prevailed, and price growth also increased. Transaction prices in the primary market (RPT) increased in all groups of cities.
On the secondary market there was also an increase in offer (DOC) and transaction prices (RWT) in all groups of cities. Prices adjusted with the hedonic index grew in all groups of cities, which means that similar apartments were sold more expensive than in the previous quarter.
The NBP reported that in the case of the rental market in large cities, a high supply of long-term rental offers, including those purchased for investment purposes, may be conducive to declining rental rates in the future.
The dynamics of average transactional rental rates per square meter of apartments (excluding service charges and utility charges) fell in all groups of cities, both q / q and y / y. Despite a significant drop in rental income, the premises were not put up for sale on a large scale. they were looking for security for the invested capital in real estate, and to a lesser extent they expected an attractive rate of return.
The current level of rental rates in long-term rental (average in the 7 largest cities (Warsaw and 6 cities) indicated a lower level of the flat rental profitability index. Still, the housing investment (excluding transaction costs) was competitive compared to the interest rates on bank deposits and investments in 10-year investments. Treasury bonds, or in commercial real estate, the NBP reported.
Quarterly sales of housing construction contracts on the 6 largest primary markets in Poland 3 increased by 19.5 thousand compared to the previous quarter. At the same time, approx. 13.9 thous. contracts for the construction of apartments, ie more by approx. 14.3% q / q.
The estimated rate of return on equity of housing developers on investment projects increased compared to the previous quarter and amounted to approximatley 23%.
The NBP emphasized that in the first quarter of 2021, a historically high number of apartments was completed in Poland, i.e. 7.4% more y / y, mainly apartments for sale and rent (57% share compared to 62% in Q1 2020). y.), individual (correspondingly 41% compared to 36%), while cooperatives and others (each accounted for 1%, i.e. remained unchanged compared to Q1 2020).
The report highlights the fact that the commercial real estate market has been hit hard by the COVID-19 pandemic, and the associated restrictions on commercial and corporate activities will impact rents and real estate sales transactions and will be felt in the longer term.
In the office real estate markets, imbalances resulting from the excess supply of space for rent in relation to the demand for it increased in the first quarter of 2021. The supply of new space and space under construction is still at a high level, which is related to the commencement of construction works before a pandemic that investors want to end.
In Q1 this year. there was a low increase in new space in the retail sector, which may mean that investors consider the market to be saturated. On the other hand, the market of modern warehouse space in Poland remained in a phase of dynamic development, and the demand and supply remained high, the report said.
The quality of loans granted to enterprises for real estate did not change significantly compared to the previous quarter. The ratio of non-performing loans for loans for office real estate slightly decreased to the level of 6.3% against 6.4% in Q4 2020, for loans granted for retail and service space increased to 14.1% compared to 13.5% in Q4 2020. This ratio for loans for warehouse and industrial space was 7.6% and for other real estate increased to 8.5 % from 8.2% The non-performing loans ratio for housing development loans increased slightly to 18% compared to 17.5% in 4Q2020. from previous years, according to the report.
Source: NBP and ISBnews
