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Despite the fact that the price of land for home construction continues to rise, establishing new highs, there remains hope for individuals searching for constructing property. Despite the continued high demand for single-family homes, price growth has obviously slowed.
Until 2019, the third quarter regularly saw a decline in average construction plot transaction prices. We saw rises in the main Polish cities this year, as we saw last year. However, there was a noticeable deceleration when compared to those observed in Q2 2021. Those seeking for house building sites in regional capitals as well as those outside of them felt the impact. The rising trend in the home sales market slowed in Q3 2021 as well.
The slowing in the rising trend was particularly noticeable among individuals searching for construction land in Olsztyn, where the average transaction price grew by 1.5% in Q2 2021, compared to a 5% increase three months earlier. Average sums written in notarial deeds of land transactions in Wroclaw, Warsaw, and Poznan were more constant – a rise of around 1% y/y. Buyers of construction plots in Lodz found themselves in a very different scenario, with prices rising by an average of 6% in a quarter. It was the sixth quarter in a row that the growth occurred, and the second time that it topped 5% in comparison to the preceding quarter.
On a quarterly basis, such high gains resulted in a 20% rise in the average transaction price in ód compared to the previous quarter. However, there is still an opportunity for expansion in Lodz, since the average price for plots in this city was PLN 285/m2 in Q3 2021 – far lower than the rest seven cities studied. For comparison, at the time, notarial deeds in Cracow averaged PLN 561/m2, in Gdask – PLN 626/m2, and in the most costly Warsaw – PLN 783/m2, according to bankier.pl.
The fact that the rising trend has slowed is of little comfort to those seeking for land on which to build a home. Rates are at an all-time high, and while Q3 2020 saw an increase in average transaction land rates due to increased demand for houses, in previous years, Q3 was generally followed by adjustments in average amounts paid for construction plots.
The increased demand for single-family dwelling development, among other factors, has resulted in higher sums stated in notarial deeds of building land sales than previous year. The fact that demand has not deteriorated is demonstrated, among other things, by the strongest quarter since 1989 in terms of the number of issued permits for single-family house building. Individual investors acquired licenses to build 34,083 dwellings in Q3 2021, according to the Central Statistical Office, which is up 21% from last year and 37% from two years earlier. In October, 9324 single-family homes were built, up more than 18% from a year earlier and 12.5% over October 2019.
The October urban.one index reading of 142.84, albeit 5 points higher than a year earlier, was up 0.22 points month-over-month, almost as much as the month before, indicating further, though not significant, rises in construction land transaction rates.