The past year saw a significant increase in investment activity from real estate developers, resulting in a large, and in some metropolitan areas, even record-breaking, housing supply. Experts from the portal RynekPierwotny.pl analyzed how this affected prices and, consequently, availability. What can those considering buying a property with a loan expect in 2025?
2024 Summary of the Housing Market
- “The past year once again demonstrated the strong connection between the mortgage market and the housing markets in cities with the highest demand for apartments,” says Marek Wielgo, expert at RynekPierwotny.pl.
The first quarter was busy for both banks and developers, as both signed agreements under the “Safe Credit 2%” program, which ended at the end of last year. However, in the following months, banks and developers’ sales offices in the seven largest cities started to empty.
However, it cannot be said that 2024 was unsuccessful for banks and developers. Banks are expected to grant up to a quarter more housing loans compared to the previous year and over 50% more than in the pandemic year of 2022. On the other hand, 2024 will see a lower sales performance for developers compared to last year. However, after 11 months, Łódź remains positive, with developers having signed about 4,900 contracts. In the Upper Silesian-Zaglebie Metropolis (GZM), apartment sales are close to the record level of 2023, when the “Safe Credit 2%” program provided a boost. Sales stagnation is also unlikely in Poznań.
- “What connects these three metropolitan areas? Apartments are the cheapest there per square meter. Where they are the most expensive, the decline could be significant. In Kraków, this could be the worst year in the last six years. In Warsaw and Wrocław, only 2022 was worse, when there was a credit market collapse,” comments the expert from RynekPierwotny.pl.
Developers have probably learned their lessons, as in the last three months, the average price per square meter in Warsaw dropped by 1%, and in Kraków, it remained virtually unchanged, as developers introduced relatively cheaper apartments to the market. An interesting situation occurred in May, which saw a significant increase in the supply of apartments in the popular segment in Warsaw, Łódź, Poznań, and GZM, resulting in more signed contracts.
However, it is important to remember that the average price per square meter can increase or decrease from month to month, depending on whether expensive or relatively cheap apartments (for the market) are introduced. For example, in Trójmiasto, the average price per square meter skyrocketed by 4% in November, surpassing PLN 16,000. This was due to a large batch of very expensive apartments (on average PLN 21,200/m²) being sold. A similar situation occurred in GZM, specifically in Katowice.
Increased Investment Activity and Record Supply
This year, developers’ investment activity increased, likely due to the strong economy and the prospect of interest rate cuts. In Poznań, the Upper Silesian-Zagłębiowski Metropolis, Łódź, and Trójmiasto, developers have introduced more apartments for sale than ever before.
In addition, in all metropolitan areas, developers have put more apartments on the market than they have sold. As a result, there is a very large, and in some cities, even record-breaking, housing supply.
By the end of November, over 15,800 apartments were available in Warsaw. This is approaching the record result from May 2019 when developers in Warsaw offered only 400 more. Developers in Kraków (over 8,600), Wrocław (over 8,900), and Trójmiasto (almost 7,100) also have offers close to record numbers. Moreover, developers in Łódź (over 9,500), Poznań (almost 7,800), and GZM cities (almost 9,600) have never offered so many apartments.
Unfortunately, although the apartment selection is larger than last year, the number of the cheapest properties is lower. For example, in Warsaw, at the end of last year, developers had 317 apartments priced below PLN 10,000 per square meter. By the end of November, there were only about 100 such apartments. In Kraków, the number dropped from around 80 to less than 40. In Łódź, it decreased from nearly 3,200 to just over 2,200, and in Wrocław, from around 530 to 240. The exception among the metropolitan areas is GZM, where, 11 months ago, nearly 2,800 new apartments cost less than PLN 10,000 per square meter, and now there are about 3,300.
Price Stabilization and Forecasts for 2025
However, there is some good news: the rise in the average price per square meter of apartments available from developers has slowed down. But compared to the end of last year, the increases are still significant. In the race for this year’s largest price increase, Wrocław is in the lead, with an increase of 12% since the beginning of the year. Łódź, with a 10% increase, takes second place, and Poznań and Trójmiasto are tied in third place, with an 8% increase. In Kraków and GZM, the average price increased by 6%. The smallest increase was in Warsaw, at just 5%.
Looking ahead to 2025, we will enter with the government’s decision to discontinue work on the “Housing Credit #naStart” program and a vague announcement of another. Speculation will now begin regarding new forms of support for homebuyers. How will developers and potential buyers respond?
- “The supply of new apartments in the largest metropolitan areas is already so large that some developers will probably slow down supply. Of course, we are not facing a repeat of 2022 and the first half of 2023, when developers halted investments due to fears of an economic recession, leading to rising unemployment and falling wages. Currently, nothing indicates such a dark scenario. On the contrary, investments funded by the European Union, including those under the National Recovery Plan, could give our economy a growth boost,” assesses Marek Wielgo.
If the government pushes through some program supporting homebuyers, it is likely that only a few will benefit from it. Unfortunately, it does not seem that housing loan availability will significantly improve next year. Although interest rates will likely start to decrease due to lower inflation, this process will probably be much slower than the rate hikes in 2022. A significant recovery in the housing loan market is expected to take place in 2026 or perhaps even a year later.
- “Nevertheless, we cannot rule out a moderate increase in demand for apartments, provided that developers adjust the prices of apartments to the modest purchasing power of homebuyers with credit. Many of them are losing sleep over rising living costs, especially energy prices, which are taking up an increasing portion of their household budget,” says the expert from RynekPierwotny.pl.
According to him, even in the largest cities, stabilization or a slight decrease in the average price per square meter of new apartments is possible next year. This would only happen if developers increased the supply of apartments affordable to the average homebuyer. The end of this year has shown that this scenario is likely, as evidenced by the situations in Warsaw, Kraków, Łódź, and Poznań.
Unfortunately, there is also a less favorable scenario for potential apartment buyers—an increase in supply, but mainly expensive properties designed for wealthy clients. In that case, the average price per square meter would soar again. This situation recently occurred in Trójmiasto. Moreover, there is a risk of a buildup of infrastructure investments under the National Recovery Plan, which could lead to rising prices of many building materials and labor costs.
