2021 in the residential market in Poland was marked by a deepening imbalance between supply and demand. Developers put up for sale 11,000 fewer units than they sold. Buyers considered flats mainly as a safe capital investment. Had it not been for the pandemic, the slowdown that awaits the Polish residential market in 2022 would have arrived much earlier.
- 2021 saw housing sales reach 69,000 – only 2017, considered the peak of the boom in this market cycle, had a better performance.
- The difference between the units sold and those introduced to the developers' offer was 11,000 - the largest imbalance between supply and demand since 2013. At the end of December 2021, the offer was 22% lower than a year earlier.
- Rising costs of construction combined with a limited supply of new flats and unabated demand resulted in rapid price increases – by 14% to 18% y-o-y and even, as in the case of Łódź, by 21% y-o-y.
- It is difficult to expect significant discounts, given the very high level of pre-sales in projects under construction and the limited supply of new units, with investment demand still high.
The challenge is not selling a property, it’s finding one to buy
2021 was exceptional in many respects. The share in demand of buyers purchasing units for their own needs was probably at its lowest for many years. The residential market has gone from primarily being a place where one of the most important human needs is met – to have a home for oneself and one’s family – to almost being on a par in importance with other capital investments. We have not seen such an acute imbalance between rapidly growing, purchase-determined demand and supply which is struggling to keep up since 2007,
is how Kazimierz Kirejczyk, chief residential market analyst and Head of Strategic Advisory Panel at JLL summed up the previous year.
A record numbers of permits issued, but nothing on offer
They are introducing them, but not in the markets that have so far been regarded as the litmus test of the primary market, i.e. Poland's six largest cities. Our analyses show that smaller cities are now responsible for the sharp increase in developer activity. And we are not talking about cities from the next ten largest markets in Poland, but those below 100,000 inhabitants. Back in 2017, 60% of all new units were being built in the six largest agglomerations. Today, this trend has been reversed with these smaller markets now responsible for around 70% of developer production in the country,
comments Aleksandra Gawrońska, Head of Residential Research at JLL.
There is no indication that housing prices are set to fall
There are many indications that the supply-demand gap on Poland's largest residential markets, which is largely responsible for the price increases, will continue to widen. A certain slowdown in demand can be expected in connection with rises in interest rates, and the weakening in the purchasing capacity of buyers that would follow – especially those buyers who took out a mortgage to purchase a property. Still, rising inflation will continue to underpin the shift of savings into the real estate market,
explains Aleksandra Gawrońska, Head of Residential Research at JLL.
Statistics from the residential market confirm that the development sector is entering 2022 in very good shape. Unfortunately, as has been the case in the past, the most important risks have nothing to do with either the potential of development companies or factors directly affecting demand, such as interest rates. It is these external factors, including those originating from outside Poland, which make it so difficult to formulate clear-cut forecasts,
concludes Kazimierz Kirejczyk.
