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In most major markets, housing is twice as expensive as inflation. There is no question of price stabilization yet. The recent interest rate hikes did not stop them either.
Witold Indrychowski, president of Merari, points out that the sales and credit process lasts 2-3 months, not a few days. Hence, there is still time for demand to respond to more expensive loans.
– But even in the perspective of one year, the interest rate hike will not significantly affect the interest. There are still a few million flats missing in Poland, and the pandemic has reinforced the need for a comfortable place to live, explains Joanna Chojecka, sales and marketing director at Robyg.
Piotr Tarkowski, a real estate expert and board member of Allcon, another company in the industry, notes that today’s level of the central bank’s main rate, i.e. 1.25%, is still lower than before the pandemic. Back then it was 1.5 percent.
– Monthly payment of a model mortgage, i.e. a loan of PLN 300,000 PLN for 25 years, with the bank’s margin equal to 2 percentage points. will now increase by less than PLN 100 compared to October and by approx. PLN 130 compared to the level from before the increases. Therefore, loans will still be cheaper than those from before the pandemic. In the case of the model mortgage, it is worth about PLN 80 per month – emphasizes Tarkowski. He adds that even if the rates increase to 2.5%, installments will increase by PLN 320 compared to those before the increases and PLN 120 compared to the amounts before the pandemic.
– It is relatively small, taking into account the growing salaries. Of course, inflation has an impact on real wages, but we cannot forget about the annual increase in the purchase value of real estate, which in some markets exceeds even 10%. – he comments.
At the same time, the excess liquidity of banks (institutions have accumulated large deposits of deposits) will cause higher central bank rates to not translate much into higher interest rates on deposits.
– Therefore, it does not seem that they will become an attractive investment alternative for clients buying flats in order to protect their capital or rent profit. The rates would have to rise above inflation – and this scenario is out of the question today, believes Bartosz Kuźniar, president of Lokum Deweloper.
Developers point out that more expensive money means higher construction costs. In the following quarters, this will translate into higher apartment prices. In addition, there are more and more expensive building materials and land, more and more expensive labor and electricity.
According to Nikodem Iskra, president of Murapol, this pool will also include new regulatory costs, such as contributions to the Development Guarantee Fund or adjusting investment parameters to the provisions on energy-saving buildings.
– Therefore, even if the demand will decrease, the prices will show a tendency to increase. This will be the case in the next two years, which will also be associated with a smaller number of commenced construction projects – adds Witold Indrychowski.
Experts pay attention to one more element. We are talking about the developers’ margin, which today amounts to an average of around 26%.
– If there is such a possibility and the market situation allows it, of course, developers raise prices – the normal law of supply and demand applies here. If we have two investments in one location and the new project has higher prices, because the contractor is contracted at high costs, it is obvious that a developer who has contracted the construction cheaper will bring the prices to the level of a competitor, explains Robert Chojnacki, president of redNet 24.
However, experts point out that the margin is still lower than in the previous boom in 2008, when it reached 37%.
– In municipalities that manage to improve the factors that strongly limit the supply today, i.e. the availability of land, the pace of adopting local spatial development plans and issuing administrative decisions, we can expect prices to stabilize the fastest – believes Bartosz Kuźniar.
Adoption by the Sejm of the announced regulations on supporting the purchase of apartments through state guarantees of own loan contribution may also help. Developers will want to fit within the limits of the government program.
Patrycja Otto, November 18, 2021