Will apartment prices fall?
Ten post dostępny jest także w języku: polski
How will COVID-19 affect apartment prices? Do developers introduce promotions? The survey was conducted by the real estate service Dompress.pl.
Mirosław Kujawski, Board Member of Develia S.A.
No reductions in apartment prices should be expected. Sales have slowed down strongly, but this does not mean that customers will resign from buying apartments because the prices turned out to be too high for them overnight. Sales have slowed down as it is difficult to conduct almost any business activity. Everyone is worried about the future and is holding back decisions which do not concern the most important needs. When the situation starts to stabilize, the sale of apartments will start again. Despite the current situation, we have a large number of contacts and traffic on the website. This is confirmed by surveys of websites with apartment advertisements, which show that nearly 80% of those interested in buying a flat maintain their decision to buy it, allowing for the thought that the transaction may be postponed or that the purchase will concern a different flat than initially assumed, i.e. smaller and cheaper.
It should also be noted that after the last crisis in 2008, prices were stable for a long time, and in some cities, e.g. in Wrocław, they did not fall, but even rose. Price drops occurred at the time of high oversupply and the share of ready flats in the offer at the level of nearly 30%. Currently we have a record low offer of flats on the market, and there is practically no ready flats. It is also to be expected that in the following months the supply will fall, which will be related to developers withholding new investments as well as problems related to obtaining building permits.
At the same time, I would like to point out that at present we have a completely different situation than over a decade ago. The purchasing capacity of Poles is twice as high. In other words, they can afford a flat twice as big.
Zuzanna Należyta, Sales Director at Eco Classic
It is difficult to say whether apartment prices will change, because we do not know what will happen when the restrictions on movement are lifted and the normal pace of work and functioning of the economy is restored. Demand has been “artificially” dormant and only the coming months will show how much and whether it will decrease at all compared to supply. Let us remember that many developer companies have suspended their investments or subsequent stages of projects, which will significantly reduce supply. The alternative to investing in real estate is also not very interesting. Investing in shares, funds, bonds is nowadays pointless, and the interest rate on deposits is negligible. On top of that there is the inflation, which in February and March this year exceeded 4 percent.
Małgorzata Ostrowska, Member of the Management Board and Director of Marketing and Sales Division in J.W. Construction Holding S.A.
The first reaction of customers to the epidemic was a temporary reduction of interest in buying apartments due to the situation related to health risks and restrictions imposed by the government. Therefore, a reduced turnover on the residential real estate market was felt. However, this does not mean that prices will fall, as they are defined by a number of factors.
Due to the crisis, the developers have suspended most of the planned investments, which will cause the supply of apartments to fall. Therefore, with much lower supply, the demand may only be temporarily halted. Especially since the current boom in the residential market has been more due to the increase in the wealth of Poles and the real shortage of apartments. In the times of the coronavirus, apartments are still an attractive form of investment in the face of low-interest bank deposits, with rising inflation. Significant drops in apartment prices, especially in the premium segment, are unlikely to be expected due to high prices of materials, land and labour.
In the Hanza Tower project in Szczecin we have selected apartments which can be bought with a 5% discount. The selected flats at the Tysiąclecie Housing Estate in Katowice can be bought without VAT, i.e. 8% cheaper. The cheapest unit costs 248 thousand PLN gross. When buying the last ready-made investment apartments in the Near Wola district of Warsaw’s Wola district, customers will pay up to 60 thousand PLN less. In the luxurious, suburban housing estate Villa Campina in Ożarów Mazowiecki you can buy terraced ecological houses in wooden technology. It is an attractive choice for many people who have come to the conclusion that it is safer and more comfortable to live in their own home in the current situation.
Zbigniew Juroszek, President of Atal
It is difficult to predict all the possible effects and the timing of the pandemic on the property market, which was previously in a high phase of activity. The effects of the current situation are visible in all sectors of the economy, which makes it even more difficult to forecast possible changes in the property sector. At the moment, however, we see the situation with the coronavirus as a phenomenon which should not have a significant impact on the primary market in the long term, including the prices of new apartments.
Eryk Nalberczyński, Sales Director at Lokum Deweloper
The situation caused by the epidemic is difficult for all the participants of the real estate market, so we try to meet the needs of customers and introduce various types of facilities when buying apartments. Such as postponement of payment dates or payment schedule 10/90. In several investments we have lowered prices of selected flats, which makes them even more attractive.
Monika Perekitko, Board Member of Matexi Polska
The situation is dynamic and its effects are difficult to predict, but the market remains fairly stable in terms of prices. I think that at the moment we can certainly talk about a halt in the growth of apartment prices, which is a favourable situation for people planning to buy a new flat.
Edyta Kołodziej, Sales and Marketing Director at Nickel Development
The demand for apartments is still huge. So if the economy is “unfrozen” relatively quickly, one should not think that the average price level will fall significantly. Much depends on how banks behave and how effective the solutions contained in the anti-crisis shield will be. However, for the time being, price falls are not to be expected in the near future.
On the contrary, the demand for houses and flats with gardens is growing. With just a piece of garden, insulation is more comfortable. Uncertainty related to leisure trips has brought reflection on the quality of time spent at home. These are our conclusions from our inquiries concerning ready-made houses and flats under construction, which we have on offer at the Duchess’s Dąbrówka Estate.
As far as promotion is concerned, we implement them in the same rhythm as before the epidemic. Special offers appear periodically, depending on the stage of construction of a given investment. In this respect, nothing has changed.
Jarosław Kozak, Vice-President of the Management Board of Waryński S.A. Holding Group
The situation caused some customers to temporarily stop making decisions about buying a flat. Besides, one should remember about the limitations of banks, offices or courts. The documents and decisions issued by these institutions are often necessary to complete the purchase process. However, in my opinion, Poles, in the face of widespread uncertainty and falling interest rates on deposits, it is the real estate that will be perceived by them as a security for their savings. Therefore, we should not feel a fall in prices, but possibly a temporary slowdown in demand. Our clients can always count on promotions in the form of discounts and other incentives.
Wojciech Chotkowski, President of the Management Board of Aria Development
We don’t know how long the situation with COVID-19 will last or if there will be a second phase of the disease. And when the economies will be back on track and how the stimulus packages will work, so any forecasts are subject to high uncertainty. The first indicators from Asian economies show the likelihood of a dynamic rebound. Assuming that economies in Europe are following the same path, it can be assumed that current housing prices may remain at the same level.
We have a promotion that was introduced even before the outbreak of the epidemic. In the Łomianki Housing Estate, mezzanines can be purchased at a price of PLN 3,000/sqm. These are larger flats, two-storey, spacious and excellent to arrange. They are distinguished by their energy efficiency and low cost of use. The whole package is complemented by Aria Smart Home – smart home system and photovoltaic panels, beautiful nature of the Vistula river basin and Kampinos National Park and convenient access to Warsaw.
Janusz Miller, Sales and Marketing Director of Home Invest
The current situation should not significantly affect apartment prices. People who count on a drastic drop in prices may be disappointed. For sure, there will be additional promotions for selected units, but such promotions have also happened before. It should be emphasized that the supply will decrease due to the fact that investors have suspended some investments, so soon there will be fewer apartments on the market. On the other hand, the demand will gradually increase after the customers temporarily suspend their purchase decisions.
Sebastian Barandziak, CEO of Dekpol Developer
Once again, we introduced the spring promotion. In our investments we offer attractive discounts on selected apartments. For example, a four-room apartment of over 72 square metres in the Nowe Rokitki housing estate can be bought for PLN 357 thousand, nearly PLN 15 thousand cheaper than before. In the Grano Residence investment in Gdańsk the discount may amount to as much as PLN 60 thousand. Promotions also include Osiedle Pastelowe, Osiedle Foresta, Osiedle Zielone and Młoda Morena Park II. Discounts in these projects reach several dozen or even several dozen thousand zlotys.
Cezary Grabowski, Sales and Marketing Director at Bouygues Immobilier Polska
At present, it is difficult to predict what will happen to housing prices, as their level depends on many uncertain factors, including the duration of the epidemic and social quarantine. However, it can be expected that the increase in prices before the epidemic will slow down. With our customers in mind, we do not give up special offers. Therefore, there are no changes to the promotions available for selected investments and apartments. It is also worth noting that our constructions are carried out according to the schedule and we do not stop introducing new investments. Recently, the Perspective project – City Villas at Kwidzynska Street in Wrocław – has been put on sale, and in Warsaw we have started the pre-sale of flats in the new Lumea housing estate, located at Batalionów Chłopskich Street.