The average transaction prices per square meter of a new apartment in the fourth quarter of last year increased the most in Gdańsk, according to the report of the National Bank of Poland. However, more than in the previous quarter, you also have to pay in Łódź, Poznań, Warsaw and Wrocław. In the capital of Lower Silesia, transaction prices on the secondary market soared by as much as 9.2 percent.
The NBP reported that in the fourth quarter of 2020, high activity in the housing market was observed, following a temporary slump in the second quarter and a recovery in the third, despite the application of varying degrees of restrictions resulting from the COVID-19 pandemic.
“The number of housing contracts sold in the largest primary markets was slightly higher than in the previous quarter, but annual sales were lower than in 2019,” it indicated.
Transaction prices of flats
The central bank pointed out that in the fourth quarter there was a year-on-year increase in the average transaction prices of flats in the primary and secondary markets of the analyzed cities. However, in the fourth quarter of 2020, the pace of this growth, especially in the secondary market, slowed down.
Average transaction prices per m2 of an apartment in the primary market:
– Warsaw – PLN 10,261, decrease by 2.3 percent year on year, increase by 0.8 percent quarter on quarter,
– Gdansk – PLN 9,401, an increase of 9.5 percent year-on-year, an increase of 4.2 percent quarter-on-quarter,
– Cracow – PLN 8,685, an increase of 5.4 percent year-on-year, a decrease of 1.7 percent quarter-on-quarter,
– Wroclaw – PLN 8,233, an increase of 7.8 percent year on year, an increase of 1.5 percent quarter on quarter,
– Poznan – PLN 7,611, an increase by 2.9 percent year on year, an increase by 2.2 percent quarter on quarter,
– Boat – PLN 6,624, an increase of 9.9 percent year on year, an increase of 3.4 percent quarter on quarter.
Average transaction prices per m2 of an apartment on the secondary market:
– Warsaw – PLN 10,072, increase by 2.7 percent year on year, decrease by 2.2 percent quarter on quarter,
– Gdansk – PLN 8,874, an increase of 6.1 percent year-on-year, a decrease of 0.1 percent quarter-on-quarter,
– Cracow – PLN 8,118, an increase of 9.5 percent year on year, an increase of 0.2 percent quarter on quarter,
– Wroclaw – PLN 7,973, an increase of 9 percent year-on-year, an increase of 9.2 percent quarter-on-quarter,
– Poznan – PLN 6,778, an increase of 2.2 percent year-on-year, a decrease of 0.9 percent quarter-on-quarter,
– Boat – PLN 5,522, an increase of 13.4 percent year on year, a decrease of 1.6 percent quarter on quarter.
Record number of apartments
In addition, a record number of apartments were commissioned throughout 2020, which was the result of developers’ activity in the previous years.
The NBP reminds, referring to GUS data, that in Poland in the fourth quarter of 2020, the highest number of apartments, historically (since 2005), was completed (from 2005) – approx. 65.5 thousand, i.e. more by approx. 3.6 thousand. compared to the fourth quarter of 2019 and more by approx. 5.9 thousand compared to the previous quarter. In total, in 2020, approx. 222.0 thous. dwellings, i.e. approx. 14.6 thous. more than in 2019 (increase by 7.0% year on year).
It added that housing construction costs (materials and labor) continued to grow, albeit at a slower pace than in the previous quarters.
New mortgage loans
According to the National Bank of Poland, in the fourth quarter of 2020 the value of disbursements of new housing loans, after the collapse in the second quarter related to the COVID-19 pandemic, was higher than the disbursements of loans in the same period of 2019.
“The value of new, PLN-denominated contracts for housing loans for households (excluding renegotiated contracts), according to NBP data, amounted to PLN 16.2 billion in the fourth quarter of last year, i.e. it was higher by approx. PLN 2.3 billion (16.8% .) compared to the figure from the previous quarter and higher by approx. PLN 3.4 billion (26.7%) compared to the fourth quarter of 2019. ” – indicated.
The report stated that the estimated rate of return on equity of housing developers on investment projects remained at the level of the previous quarter and amounted to approx. 21 percent. Still, compared to other industries, it remains at a high level. This was the result of an increase in transaction prices, which more than covered the increase in the cost of housing producers.
According to the NBP, liquidity may be a problem for developers, despite high equity (solvency). This is the result of financing projects, to a large extent, from liabilities to contractors and a small share of a bank loan.
Changes in the commercial sector
The NBP pointed out that the commercial real estate market has been affected by the COVID-19 pandemic, and the related restrictions on commercial and corporate activities will affect rents and real estate sales transactions.
“It should be remembered that rents in commercial properties are signed for several years, and the termination of contracts involves costs, but when the tenant becomes insolvent, he is unable to pay the rent. Some tenants, especially significant ones, use the situation to negotiate the level of On the other hand, real estate purchase and sale transactions are the result of a long negotiation process (including due diligence), so the possible impact of the pandemic on the investment market will be visible in the longer term, “the report reads.
It added that the pandemic accelerated the changes taking place in the office market, where an increase in the vacancy rate and a decrease in demand for office space was observed. In order to reduce the costs associated with renting office space, companies often decide to work remotely or hybrid work.
The central bank announced that the retail sector was significantly affected by the COVID-19 pandemic in the fourth quarter of 2020. “A large part of retail chains is renegotiating lease agreements in shopping centers. Many large and well-known chains are still resigning from premises in shopping malls, moving their stores to the Internet or shops located on high streets, or completely leaving the Polish market” – indicated.
On the other hand, the market of modern warehouse space in Poland remained in the phase of dynamic development in the last quarter of last year, and the demand and supply remained at a high level. New warehouse spaces are located especially in the vicinity of large cities.
According to the National Bank of Poland, the value of the office, commercial and warehouse real estate stock can be estimated at PLN 314 billion at the end of 2020. This is an increase from PLN 281 billion estimated at the end of 2019, which results from the increase in the stock, changes in valuations and changes in the exchange rate.
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