Would the slowing of interest rate hikes and the lifting of the FSA’s recommendation, which drastically reduces creditworthiness, cause customers to return to sales offices, according to developers? Could unblocking access to financing from banks contribute to a real improvement in demand, while maintaining wage growth and rate levels in the rental market? The poll was prepared by the real estate website dompress.pl.
Andrzej Oślizło, CEO, Develia S.A.:
As a result of a series of increases in interest rates and the entry into force of the amendment to the so-called Recommendation S of the Financial Supervision Commission, demand for mortgage loans has decreased by more than 70 percent. This situation hits young people who want to become independent and buy their first apartment the hardest. Without the support of bank financing, such people have limited purchasing options. In this situation, they decide to postpone their housing plans for the indefinite future, some moving to the rental market.
Even before the outbreak of the conflict in Ukraine, Poland was at the bottom of the ranking in terms of the age at which young people leave the family home. 29 is much higher than the European average of around 25. Therefore, we view any measure aimed at loosening credit policies or supporting first-time home buyers as desirable, especially since interest in owning a home remains high. In recent months, we have seen similar numbers of inquiries as in the very good 2021. The market is currently dominated by cash purchases, with almost half of them aimed at meeting their own housing needs.
Boaz Haim, CEO of Ronson Development:
The abolition of the recommendation and the slowing down of interest rates would definitely contribute to an increase in demand. Currently, banks apply a 5 percent buffer, which means that as long as the average interest rate on a loan is 10 percent, banks have to calculate capacity as if the interest rate were to be 15 percent. If such capacity were calculated without the buffer proposed by the FSC, the global credit capacity of customers would increase by 30-40 percent. Another solution could be to change the policy of banks and introduce a fixed interest rate for the full term of the loan.
Angelika Kliś, Atal S.A. board member:
Slowing down interest rate hikes would definitely contribute to an increase in demand for apartments. In particular, a loosening of the guidelines of Recommendation S, which even for relatively high-earning customers forecloses access to financing for the purchase of an apartment, would be very helpful. Rates, though high now, are subject to market cycles and it is a matter of time when they will return to more affordable levels. So it is the regulator’s decisions that will have a significant impact on the pace of the market recovery. All the more so as we see that there is demand for housing and good buying sentiment among customers.
Małgorzata Ostrowska, director of the Marketing and Sales Division at J.W. Construction Holding S.A.:
A significant boost in demand will come with a sustained reduction in the level of interest rates. This is evidenced by the continued high level of investment demand, which we are seeing, for example, in the Pileckiego development in Warsaw’s Ursynów district. Lack of creditworthiness is inhibiting purchases of apartments for own use. Therefore, we are not surprised by the interest in the 10/90 program, which allows customers to buy an apartment for 10 percent of the price and freeze it for two years, which we offer in Szczecin’s Nad Odrą project.
Zuzanna Należyta, commercial director at Eco Classic:
The increase in interest rates has had a huge impact on limiting the possibility of buying an apartment, but the change in the FSA’s recommendation has significantly exacerbated these problems. Many potential apartment buyers are therefore forced to rent an apartment, which in turn has contributed to a drastic increase in rental prices. Thus, the increase in mortgage interest rates has had a direct impact on inflation.
Marcin Michalec, CEO of Okam:
Halting interest rate hikes and abolishing the FSC’s recommendation in perspective would certainly improve the situation and encourage more people to buy an apartment for their own needs or as an investment. What is needed, however, is a general, ongoing stabilization of the economic situation. The current one related to inflation uncertainty, the prospect of further interest rate hikes, and the fact that average wages are rising at a slower pace than commodity prices on the market is causing many people to put their real estate purchase decisions on hold. Added to this is the general anxiety about the situation in our part of Europe related to the prolonged conflict in Ukraine. Considering the current rental prices of apartments in major cities, many people prefer to acquire an apartment on their own.
Sebastian Barandziak, CEO of Dekpol Deweloper:
As much as possible, the impetus for improving demand could be the slowing down of interest rate increases and the loosening of recommendations, but due to the projected recession and the high cost of living, purchase interest would not immediately rise to the level before the increases. Therefore, attractive rates in the rental market will continue.
Wojciech Chotkowski, CEO of Aria Development:
Simply freezing increases in the reference rate, which is currently at a very high level, and loosening recommendations may be too weak a stimulus for the development market to revive and sustainably meet the housing needs of Poles again. It would be good for those in power to finally offer real support to young people who are buying their first apartment and who are struggling to bear the high cost of credit.
Mariola Zak, director of sales and marketing at Aurec Home
The credit crunch is translating into the housing market. Freezing interest rate hikes and improving creditworthiness are the first steps to be taken if the construction sector is to have a chance to return to relative normality. It is evident that young people in particular, who usually buy apartments on credit, simply cannot afford their own four corners at the moment. Market data shows that in 2022 banks will issue only 125,000 housing loans, the lowest level in 20 years. In the third quarter of this year, 21,200 loans were granted, down 69 percent year-on-year. In 2023, loans issued are expected to fall further to 80-85 thousand. It is also clear that most housing transactions are being carried out by people between the ages of 30 and 40 mainly for capital investment. This situation is not expected to change significantly in the near future.
