Developers Lost Momentum? Sales Level Reverts to 2022 State. July Summary of the Estate Market.
Developers operating in the seven main markets cannot boast the best results in July. In the first month of summer, they sold just under 3 thousand apartments. This is 3% less than in May and 40% less than a year ago. Even though they introduced fewer new units than in June, in the largest urban centers the offer of developer apartments already reaches almost 51.5 thousand, which is the most since the second half of 2017. In such a situation, buyers can count on price stabilization and even slight promotions.
Developers failed to turn slightly better sales in June compared to May into good results in the first month of summer. 3 thousand sold units in the seven main markets is potentially the lowest result since January 2023.
“The trends that we’ve been observing in the seven largest markets since the beginning of 2024, the results of July’s Otodom Analytics market research only confirmed. The offer of developer apartments is growing rapidly, sales are falling, average prices of apartments offered by development companies are slightly increasing, ” emphasizes Katarzyna Kuniewicz, Head of Research at Otodom Analytics.
Warsaw and Krakow are Boosting Sales
Warsaw was the clear leader in terms of sales in July. Developers in the capital sold over 1.1 thousand apartments, which is a quarter more than in June. Thus, they accounted for as much as 38% of total sales in the seven main markets. Krakow came in second, with buyers deciding to purchase 443 apartments – 15% more than the month before.
There were decreases in the other largest urban centers – from 14% in Tri-City, through 20% in Lodz to 30% in Poznan. Katowice was at the bottom of the rankings with a sale of 100 units, which is 50% less than in June. In annual terms, a declining trend is also evident. Developers in Katowice, Lodz, and Warsaw sold about 30% fewer apartments than in July 2023, in Wroclaw and Poznan 30%-40% less, and in Krakow and Tri-City over 50% less.
Surprising Supply in Krakow
In the face of declining sales, are developers holding back from launching new investments? It depends where. A lower number of apartments compared to June was introduced on three markets: Warsaw, Wroclaw, and Tri-City. However, more units appeared within the Krakow, Lodz, Poznan, and Katowice markets than the month before. In total, in July developers added to the market 10% fewer new apartments m/m but 4% more compared to the previous year.
“The volume of new supply in the seven major markets is lower than in the previous month. This result, due to the great diversity of situations in individual markets, escapes a clear assessment. Krakow deserves special attention, which in terms of new supply in July almost broke a record,” emphasizes Katarzyna Kuniewicz.
Why does the situation in Poland’s southern city attract experts’ attention? In the first month of summer, local development companies launched the sale of over 1.4 thousand apartments, thus outperforming Warsaw. A higher monthly supply in Krakow was recorded so far only in April 2021 by Otodom’s Analytics.
“It’s worth noting that June also ended in Krakow with a high number of departures (almost 1.2 thousand units), which caused the offer of developer apartments there to increase by 36% over the last two months, to the level of 7.4 thousand units,” adds the Otodom Analytics expert.
It should be noted that the visible surplus of new apartments hitting the market over the level of sales has led to an increase in the sale time indicator (a parameter calculated based on the level of supply and current sales, showing whether there is an over- or under- supply of apartments) in all cities. For now, it is set at 6 quarters in Krakow, so the situation in this city can be considered good. Similarly – in Warsaw and Tri-City, where the sale time is within the range of 4 – 4.5 quarters. On the other hand, an oversupply and sales index exceeding 7.5 quarters is visible in Lodz, Katowice, and Poznan.
Continued Price Stabilization
Prices of developer apartments are relatively stable. In July, slight increases were seen in Katowice, Lodz, and Tri-City. The largest drop, reaching 1.3%, was recorded in Poznan, where the cost per square meter fell to around 12.5 thousand PLN.
How much did you have to pay for a new apartment in July? As always, the most, as much as 17.4 thousand PLN/m2 in Warsaw. Buyers in Krakow had to reckon with an expense of around 15.6 thousand PLN/m2, and in Tri-City about 14.8 thousand PLN/m2. With the cheapest offer still Lodz, where for a square meter of an apartment you will have to pay about 11.3 thousand PLN. Despite the calming of prices, experts point out that their record level may be one of the reasons for the calmer summer in the developer’s market.
“For some buyers, high property prices can be a big obstacle. Therefore, they postpone the decision to buy their own M until the details of the new program of subsidies for mortgage loans are announced, which will facilitate the purchase of their dream apartment. However, in recent months it can be seen that developers have changed their approach a bit – temporary promotions have appeared, and their willingness to negotiate prices has increased,” summarizes Marcin Krasoń, housing market expert, Otodom Analytics.
Source: https://ceo.com.pl/deweloperzy-wytracili-impet-podsumowanie-lipca-na-rynku-deweloperskim-58592
