Housing prices and the situation on the real estate market in Poland in the third quarter 2023

Nominal average transaction prices for new housing in the six largest housing markets in Poland increased in the third quarter y/y and q/q. Since the beginning of 2023, there has been an increase in demand for housing with limited supply.

In primary markets, nominal average selling prices sq.m. in new apartments (RPT) increased both qoq and yoy, especially in Wrocławiu, Poznaniu, Warszawie, Gdyni and Krakowie, while prices decreased in Łodzi.

In primary markets, nominal average selling prices sq.m. in new apartments (RPT) increased both qoq and yoy, especially in Wrocławiu, Poznaniu, Warszawie, Gdyni and Krakowie, while prices decreased in Łodzi.

In Warszawie prices increased by 6.4% q/q and 9.9% y/y. In Gdańsku, respectively, prices increased by 2.3% and 0.3%, in Gdyni by 4.2% and 7%, in Krakowie by 4.9% and 5.5%, in Poznaniu by 5.3% and 9.8%, in Wrocławiu by 2.8% and 11.3%.

In Łodzi the nominal average transaction prices are sq.m. in new apartments fell by 0.9% q/q and increased by 3% y/y.

Primary markets saw a quarterly increase in real transaction prices relative to the consumer price index and a slight year-on-year decrease. Real growth relative to wages in the third quarter of 2023 was positive on a quarterly basis, but still negative on an annualized basis (due to higher wage growth).

In addition, in the third quarter of 2023, housing construction costs increased more strongly (in quarterly terms), i.e. materials, labor, equipment rental, which was associated with lower volumes of construction and installation production.

Developers have returned to interest in purchasing construction sites and their prices have increased. At the same time, there is an increase in rental rates for sq.m of apartments and a higher increase in the average nominal prices of transactions per sq.m of apartments in the primary markets than was observed in previous quarters.

The situation for developers

The 15 home developers' estimated return on equity (ROE) from investment projects was around 20%, down slightly from the previous three quarters but still remaining at a relatively high level.

This level of return on equity was influenced by the increase in transaction prices of apartments, covering the increase in costs of housing producers, as well as the high share of financial leverage (leverage) in development projects, covered by non-bank funds.

At the end of September, in the group of large developers, the value of the land bank decreased by 4% compared to June 2023 and by 24% compared to September 2022.

An analysis of financial data available through September 2023 showed continued growth in the third quarter. 2023: relatively good economic condition of large developers, their stable financial liquidity and a slight decrease in profitability of sales.

For the four quarters, sales revenues were similar to and higher than in previous periods, with a reduction in work in progress, reflecting the high level of transfers to customers and completion of construction work in accordance with schedules, as well as difficulties in commencing further investment and a cautious approach to increasing the work in progress production in the future due to rising costs.

Construction permits

In the third quarter of 2023, construction permits were issued for 62.4 thousand apartments, which means an increase of 15.3% compared to the second quarter of this year and a decrease of 35.8% compared to the third quarter of 2022.

In the third quarter of 2023, construction began on 53.3 thousand apartments, i.e. 13.3% more than in the second quarter and 15.7% less than in the third quarter of 2022.

Housing construction costs, that is, materials, labor, equipment rental, increased slightly more than in the previous quarter, which was associated with a decrease in construction and installation production volumes. There has been renewed interest in purchasing land for development, and prices have increased. At the same time, there was an increase in rates for apartment rental transactions. m of housing and a higher increase in average nominal transaction prices per sq. m than recorded in previous quarters. m of housing in primary markets.

Materials used from the website bankier.pl