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How much have developer flats become more expensive on average since March 2020? Where have prices risen the most? Are they still going up? What is the reason for the increases? The poll was conducted by the real estate website dompress.pl.
Andrzej Oślizło, president of Develia
According to data from the National Bank of Poland (NBP) for Q4 2020, flat prices rose by an average of 7% y/y, but a lot depends on the market. The most expensive premises are in Gdańsk and Warsaw. Taking into account the continuing high demand and external factors such as rising land prices due to their limited availability or low interest rates, which generate investment demand, I expect that in 2021 developers will have no reason to lower prices.
The scenario of stabilization and further growth of flat prices is, in my opinion, the most realistic one, but faster price growth cannot be ruled out in selected local markets where demand exceeds current supply. For example, in Warsaw the offer sell-out rate remains at the level of 3 quarters, i.e. it is significantly below the equilibrium level of 4 quarters. Part of the demand will be redirected to the secondary market, where flats bought for short-term rental purposes may appear, as this market has been under pressure for a long time. How prices will ultimately shape up will largely depend on when the pandemic ends.
Andrzej Gutowski, vice-president, sales and marketing director of Ronson Development
The increase in prices of residential real estate by 8 to 10 percent is a general market trend, which also applies to our investments. The most expensive flats are those located outside the central districts, in previously undervalued locations, de facto developing the fastest. In our case, these are Ursus and Białołęka in Warsaw, where prices have risen even more than 10 percent over the past year. There are several reasons for these increases. Firstly, limited availability of land. Secondly, issuance of building permits, which has been prolonged by nearly 50 percent. And thirdly, longer procedures in land and mortgage registry courts. As a result, fewer projects are being launched and the supply cannot keep up with the accelerated demand. Fewer flats on the market means higher prices of those available. I estimate that prices this year will increase by another 5-7 per cent.
Adrian Potoczek, Sales and Marketing Director at Wawel Service
We are currently observing an upward trend in the prices of flats on the market. The prices of the flats we offer have increased by about 15 per cent compared to 2020. This is primarily due to high land prices and the consequent decrease in supply. The price increase is also due to higher construction costs, as well as, among other things, a slowdown in administrative procedures and the increasing cost of hiring employees. The increases apply to all flats, in general, to our entire offer.
Zbigniew Juroszek, CEO of Atal
The recorded upward trend in residential prices is related to the administrative difficulties affecting the construction industry, i.e. obtaining building permits in a short period of time and increasing costs of conducting investments. Above all, raw materials and construction materials have become more expensive, but also the costs of workmanship. In addition, developers are faced with a limited supply of new land. Therefore, there are no indications that housing prices will fall. What is also important, we are currently entering a steady cycle of stable European markets, resulting in an increase in housing prices at the level of 3-4 per cent per year. I expect such a situation for the next few years on the Polish market.
Małgorzata Ostrowska, Director of Marketing and Sales Division in J.W. Construction Holding S.A.
On the primary market, prices have increased on average by approximately 7 per cent over the year. As a rule, our company tries not to increase flat prices as much as possible. For example, in projects whose construction is coming to an end this year, i.e. Bliska Wola Tower in Warsaw and Hanza Tower in the centre of Szczecin, prices have not changed over the last 12 months.
When starting new projects, however, we have to take into account factors that determine the price of flats, including the increasingly high construction costs caused by the new energy efficiency standards for buildings in force since January.
In 2021, supply will continue to be constrained by a lack of land availability. For this reason, land prices will increase significantly, both in average locations and even more so in premium locations. The fact that land in better locations is becoming increasingly difficult to obtain is evidenced by the fact that many developers, in order to purchase land, have in recent years accepted even more expensive and complex solutions, such as revitalization of industrial areas. The increasing costs of project development mean that prices will continue to rise. However, many housing market experts predict that some people will shift their interest from flats to houses and plots. Hence, in the coming months the price increase may not be as high, but still inevitable, if only due to the rising inflation.
Mariola Żak, marketing and sales director at Aurec Home
At the beginning of 2021, developers delivered 6 percent more residential units than in the comparable period of the previous year. However, at the same time, developers started around 7 per cent fewer investments in February 2021 than in the previous year. The pandemic, contrary to fears last year, has not turned the housing market upside down and there is no indication that this would change.
The prices of new flats have increased by an average of 5 per cent over the past year, while this year, in our opinion, they will increase by 3-4 per cent. The increase in the prices of flats is not only dictated by high demand, but to a large extent by the relationship between the prices of construction materials and the income of customers. Due to a very long-lasting pandemic that limits the availability of markets, the prices of building materials are rising very quickly. Demand is positively influenced by low interest rates and affordable housing loans.
In addition, the real estate market, despite the reduction of the rental market, is still considered a safe source for investing savings. Rising inflation and unstable financial markets force investors to look for safe investments that still allow for a yield of around 4%.
Cezary Grabowski, Sales and Marketing Director at Bouygues Immobilier Polska
Since March 2020, prices have risen on all six of Poland’s largest markets by an average of around 7 per cent, with the biggest increase observed in the Krakow market and the smallest in Gdansk. The main reasons for the increases include a lower number of flats on offer, a large number of customers, including investment customers, for whom buying a flat is a reasonable way to invest funds accumulated on their accounts, as well as high prices of building plots. In the period from March 2020, the increases also affected some of our projects.
For the time being, there is no indication of a trend reversal. Prices are likely to continue to rise. However, we suppose that at a slower pace. We forecast that in 2021, they will increase by about 5 percent. Further growth will not reduce demand, because in the face of low-interest bank deposits, flats will still be treated as a safe and profitable investment.
Sebastian Barandziak, CEO of Dekpol Deweloper
The prices of new flats are growing systematically. In the case of our Sol Marina project located near the Sobieszewska Island, prices over the past 12 months have increased on average by 3-5 percent, depending on the unit. The increase was influenced by the high interest in purchasing holiday flats or second homes with their limited supply. Whether property prices will be higher depends largely on demand and the current availability of units.
Zuzanna Należyta, Commercial Director at Eco Classic
According to the report of the National Bank of Poland for the fourth quarter of 2020, transaction prices on the primary market in Gdańsk increased by nearly 10 per cent year-to-year, and in Warsaw – by over 8 per cent. Taking into account that Q2 2020 was practically lost for sales and it was only in Q3 2020 that the market started to recover from the pandemic stagnation, this is a very good result. Such changes have also taken place in the case of our offering. The price increases that we had to make due to increasing interest took almost identical values. Currently, there is nothing to indicate a change in this trend. The interest rates on bank deposits and the inflation rate in 2020 meant that keeping money in the bank meant that it lost value. Low interest rates on loans, in turn, were an incentive to use this source of financing. In the last 2 years, the activity of funds investing in the purchase of flats for rent has significantly increased, which has significantly reduced the offer of small, most sought-after units.
Due to the remote work of many institutions, the investment process has significantly lengthened, which in turn affects the level of the offer on sale. An amendment to the Developer’s Act is also under way, significantly complicating and making the process of selling flats more expensive.
The above factors, together with the inflation rate forecast for this year of approximately 3 per cent and economic growth of up to 5 per cent, make us expect further significant increases in the prices of new flats.
Janusz Miller, Sales and Marketing Director at Home Invest
The prices of flats in our investments are growing systematically. Taking into account the period from March 2020, depending on the investment, the average increase amounted to about 7-8 per cent. Obviously, the most expensive are small two-room flats in the investments in Bielany and Targówek. The main reason for the increases is the general increase in construction costs, the difficulty in acquiring new investment land and the decreasing offer of new flats.
Tomasz Czubak, Development Projects Director at Jakon
The increase in transaction prices of new flats from March 2020 to date depends strongly on location. In some centres, the increase amounted to 3-5 per cent, while in some it was almost 10 per cent. The highest price increases can be observed in large urban centres such as Warsaw, Wrocław and Poznań. Attractive land is becoming increasingly difficult to find in these locations, which has an impact on housing prices. In the coming months, we expect a further increase in flat prices. The planned introduction of the Developer Guarantee Fund will cause an immediate increase in prices by the value set by the government. At present, we are talking about a value in the order of 2 per cent, and this is what developers will add to flat prices. The sudden increase in prices of construction and reinforcement steel also determines price increases. Suppliers are increasingly trying to renegotiate old contracts, which translates into construction costs.
As an experienced developer we try to protect our clients from the negative effects of price increases. In investments already on sale, we do not change flat prices, so that none of our customers feels harmed. However, when it comes to new investments and subsequent stages of the currently running projects, we are forced to revise our assumptions, which results in the increase of the offer prices.
Agata Zambrzycka, Sales and Marketing Director in Aria Development
In our projects, mainly smaller flats have become more expensive. In the New Natura 2 estate we increased prices of flats up to 45 square metres. In Osiedle Łomianki the prices of flats up to 60 square metres have increased. This is due to the fact that we will soon be delivering ready flats, which, as we know, are the most popular among customers.
The main reason for the increase is the rise in prices of construction materials and labour costs. As a result of these two factors, the cost of construction of a typical four-storey building in developer condition has significantly increased. Prices of flats are also driven up by the costs of land purchase. In Warsaw, one can find residential investments where as much as one third of the value is the price of the plot.
Edyta Kołodziej, Sales and Marketing Director at Nickel Development
The prices of flats in our investments have increased by about 3 per cent in comparison with last year, which does not deviate from the average rates for Poznań for this period. Practically no factors dependent on the location or the characteristics of the product itself have influenced this. I can say that the least increase in prices of flats in our suburban investment Osiedle Księżnej Dąbrówki, which remains the most attractive in terms of price.
Joanna Chojecka, sales and marketing director for Warsaw and Wrocław at Robyg SA.
Prices of flats have been relatively stable since March 2020, they are not growing significantly. Customers’ preferences have certainly changed, and they are looking for flats with balconies, terraces or gardens in the first place. We expect this trend to continue in a year or two. If prices are higher in some locations, it is most often due to the increase in land prices, especially in large cities where the land base in attractive districts is shrinking.
According to our observations and forecasts, prices will continue to grow steadily. This is due to both the rising prices of materials and the increasing costs of construction works. The situation is also not improved by new regulations related to thermal protection of buildings and the potential creation of a Developer Guarantee Fund.