No recovery in sight for Polish residential market (PL)
Monday 13 July 2009
Although the market has already gone through the worst phase of the crisis and the steepest price reductions are not expected to reoccur, it still remains in the doldrums with no hope for improvement soon.
"Major Polish Residential Markets in mid-2009", the newest report by the Market Research Department at Emmerson Real Estate delivers comprehensive study on the vital changes the market has undergone during the last two quarters. The largest cities such as Warsaw, Krakow, Lodz, Poznan, Wroclaw, Szczecin, Katowice and Tri-City have been suffering from substantial oversupply of dwellings listed for sale by both corporate property developers and individuals who made their acquisitions for investment purposes. “The scale of the problem is being reflected by the amount of 8,705 ready-to-be-occupied housing units which corporate developers are struggling to sell. We noticed almost 25% quarter-to-quarter boost in that measure," declares Marcin Plaziński, a deputy director of the department and the co-author of the report.
At the end of H1 2009 the primary market offer in 10 major cities included 820 housing projects with almost one third situated in the city of Warsaw. Such a high supply outstrips demand which is strictly limited due to much tighter mortgage granting restrictions introduced by banks in Poland. Surprisingly, after the turn of 2008 and 2009 when developers were forced to lower their price expectations, the prices underwent only marginal fluctuations in Q2 2009. In majority of the cities they continued their downward move whereas in Warsaw and Lodz even scant rises were noted.
As much as 17 housing projects were put on hold in the recent quarter. “We noticed two attitudes towards the current market slowdown. Some developers prefer to remain uninvolved and hinder their developments. The others, though, such as Polnord, Gant or PBG Dom try to take advantage of exceptional opportunities to purchase a property or the entire housing project for a reduced price," adds Marcin Plaziński.
The idea that the Polish residential market will soon experience a burst of high price inflation remains an elusive dream. The weak performance is very likely to persist through the rest of 2009. ”Family on its own” - the governmental program of preferential mortgage loans aimed at bringing the revival back, although being a subject to the recent surge in popularity, may only have a limited impact on the key local markets as it covers only the small part of the current market offer with the cheapest and the smallest dwellings.