Further increases in housing prices seem to be an inevitable scenario in the context of the next government subsidy scheme, according to Otodom Analytics’ director of market research Katarzyna Kuniewicz.
Prices admittedly cannot rise indefinitely, but ever-increasing wages are putting off the moment when demand will say enough. Therefore, further increases seem, after the announcement of the next subsidy scheme, an inevitable scenario that will once again swing the market to the demand side. It is true that supply increased at the end of the year, but […] not because developers believed in the stability of demand and the market, but because, after the price surge, the profitability of the implementation of selected projects clearly increased, it was reported,
Despite the increase in salaries in the largest cities, the ratio of the purchase price of 1 sqm of a flat (at the average price) to the average salary in Q3 2023 ranged from 0.57 in Warsaw to 0.76 in Łódź (data for Q4 is not yet available). This means that 0.6 – 0.8 metres of flat could be bought for the average salary in the largest cities.
“When the conversion rate falls below 0.5, i.e.: we cannot even buy half a metre of flat for the average salary, the situation becomes worrying. People can no longer afford the luxury of ownership. Consequently, they go to the rental market. Young people stay in their parents’ homes. With such a low conversion rate, the richest will remain on the market, i.e. some 10-15% of those interested in buying. And unless the supply side is strengthened, maybe we should start getting used to this thought,” said Kuniewicz.
Those who need a simple flat will either rent it or buy a cheaper one on the outskirts or under the city. Or under the city they will buy a plot of land and build a house, and this will lead to an amplification of the problem which is urban sprawl, the expert estimates.
“We certainly need a comprehensive housing programme, not a credit programme, which is essentially what BK2% was and what its successor ‘Housing to Start’ is supposed to be. I have not the slightest doubt that the housing market in Poland needs to stop looking globally. There is no single recipe for all cities put together, because there is no single market. Housing problems need to be solved in close cooperation with the individual local governments of the largest cities. Certainly, the procedure for obtaining building permits needs to be speeded up, and it needs to be checked what land in cities can be freed up, for example by allowing demolitions and demolition. In many cases, the legal status of properties needs to be straightened out. We need to act in many areas in order to balance things out and not to swing the market one way or the other,” concluded Kuniewicz.
Source: Otodom
