The sale of apartments in the six largest markets in Poland amounted to 6,600 units in Q3 2022, JLL analysts estimate. At that time, the newly introduced investments to the offer had approx. 7,000 sqm of apartments.
In July, JLL announced that in the second quarter of this year, in the six largest Polish cities, developers sold a total of 9,200 dwellings and it was 11.5% less than in the first quarter of 2022. According to JLL, it was the worst result recorded since the lockdown, i.e. in the second quarter of 2020, when 6,900 were purchased apartments.
In Q3 this year, in addition to the decline in sales, another important phenomenon is the decline in market transparency. In July 2022, JLL informed that the offer at the end of June, in addition to apartments in investments actually intended for sale, briefly appeared in the announcements of investments in which the sale began before the end of June and then further sale in July was suspended.
“The number of such flats withdrawn from sale is around 4,000 in the six analyzed markets – in turn, the newly introduced investments in Q3 had around 7,000 flats. At the same time, despite the fact that the new supply should already be covered by the Act on the Development Guarantee Fund, flats in most of the projects that appeared on sale in the third quarter of this year are not covered by the DFG contribution. Apparently, developers managed to sign at least one sale agreement in them before the end of June,” said Aleksandra Gawrońska, director of the JLL Residential Market Research Department, quoted in the message.
According to her, prices in investments where the sale takes place are more and more often less transparent.
“There is a growing range of promotions and discounts, usually offered only to selected premises, but in practice, sellers show great flexibility when they see a buyer who is really interested in buying. Thus, the spread between the starting price and the transaction price is widening, and in many cases the price can only be found out in during the conversation in the sales office,” added Gawrońska.
The chairman of the JLL Strategic Advisory Panel, Kazimierz Kirejczyk, points out that “2023 will be very difficult for the sector”.
With falling sales, developers should proportionally reduce the size of the available offer. An unfortunate coincidence meant that the effective date of the Development Guarantee Fund Act, set for the half of the year, encouraged companies to increase the supply just when they should reduce it at all costs. Rising costs of financing investments and problems with sales will most likely result in a very strong slowdown of new investments next year,” said Kirejczyk.
If the situation on the market does not improve in a short time, it may result in a decline in investments initiated by developers from over 160 thousand. last year up to about 60-70 thousand in 2023 nationwide. Negative consequences will then be felt not only by development companies, but also the contracting sector, manufacturers of household appliances and building materials, and the furniture industry, concluded in the information.
Source: JLL and ISBnews
