Average offer prices of apartments increased by 1.5% q / q in Q3 2022 and it was the slowest price increase in nearly two years, according to a report by Polityka Insight and Otodom. In annual terms, the growth slowed down to 14.5% from 16.4% y / y in Q2 this year. This means that for the first time in a decade, real housing prices have started to decline.
In the third quarter, the average offer prices of apartments increased by 1.5%. This is the slowest increase in prices in almost two years – the last time such small increases took place at the end of 2020. As a result, the annual dynamics decreased – to 14.5% from 16, 4% in the second quarter and 16.5% in the first three months of the year Such a slow pace of growth in housing prices together with increasing inflation mean that, for the first time in a decade, housing prices in real terms, i.e. compared to the average prices of goods and services, began to fall, according to the publication Housing Quarterly report on the situation on the housing market in the third quarter of 2022.
Demand constraints are primarily responsible for decelerating prices – since the beginning of the year, interest in flats has been declining sharply, especially in demand financed by credit.
The authors remind that, according to BIK data, the value of inquiries about housing loans in September was 68.7% lower than a year ago (in June the drop amounted to 60% y / y).
It is becoming more and more difficult to sell an apartment. Q3 brought a rapid extension of the period of displaying one residential offer on the Otodom website – in the last three months the median time of listing activity was 76 days compared to 64 days in Q2 and 58 days in 2019-2021. the persistently high number of available apartment offers – it amounted to slightly over 307 thousand. It was the result of a faster decline in demand for apartments than supply – the number of new offers decreased in the third quarter only by 11% q / q compared to a 5% decrease by this the same time a year earlier, the report reads.
As the authors noted, the supply on the primary market is falling, while the secondary market is increasing. For the next quarter in a row, the share of new flats among the available offers is decreasing, while the supply of flats on the secondary market is growing, especially those built in the last 5 years.
This is the result of a significant reduction in the number of investments commenced by developers. In the 20 largest Polish cities, the number of apartment constructions for sale or rent has dropped to the level of 2016, i.e. the beginning of the boom on the Polish real estate market. This situation enables developers to raise their asking prices – they justify it. As a result, prices on the primary market increased by 17.6% y / y in Q3, compared to 12.3% in the secondary market. offered by developers of apartments, according to the report.
Polityka Insight and Otodom indicate that price increases are the fastest in small towns. The market of the largest cities reacts the fastest to a collapse in demand.
In metropolises inhabited by over 500,000 people, the quarterly price increase was only 1%. On the other hand, prices rose the fastest in the smallest towns, i.e. up to 50,000 inhabitants (by 2.8%). This is especially interesting in the context of the data. The Central Statistical Office on the number of started construction of residential real estate, because it is outside cities with poviat status that the number of real estate built for sale or rent is decreasing the slowest. As a result, the scale of the imbalance between supply and demand on the local market may be the largest. There may be a clear price correction in localities, analysts wrote.
They also pointed out that increases in small apartments are slowing down. The prices of flats with an area of up to 40 sqm increased by 1% compared to the second quarter, while the increases in the prices of the largest flats accelerated to 2.8%.
This is all the more surprising as the demand for smaller flats is the most resistant to a collapse in the credit market, as small-sized flats are still within the creditworthiness range of Polish families. Such a trend reversal may be a statistical artifact (compared to Q3 2021). prices of the largest premises are still growing the slowest), but may also show a change in the attitude of sellers. Due to the decline in credit availability, their only buyers are cash customers who, due to rising inflation, want to invest their savings in real estate. is of great importance as they expect prices to rise further, the report reads.
Source: Polityka Insight, Otodom and ISBnews
