In 2024, property prices are expected to continue rising at a rate dependent on demand, further stimulated by a new government program. Preliminary assumptions indicate that the scale of the additional demand and taxpayer burden will be less than with the “Safe Mortgage 2%” scheme.
We are receiving more details about the program set to replace the “Safe Mortgage 2%”. The new solution is expected to launch by mid-2024. Preferential loans for purchasing first homes are expected to have even lower interest rates; however, a portion of top earners will be excluded from the program.
The new program is designed with the aim of providing support to those who, without subsidies, would be able to afford a loan. The income thresholds proposed by the ministry will determine this. In comparison to the “Safe Mortgage 2%”, the new program is expected to be a smaller burden on the budget.
“If we were once again dealing with a large stream of cheap money supporting those who cannot afford to buy their own apartment, prices could increase by several percent or more in 2024,” shared Kuba Karliński, founder of Magmillon in an interview with MarketNews24. “With the new program, we can expect smaller apartment price increases, around 8-10%.”
In the first year, the program is projected to cost half a billion and generate 50,000 preferential loans. Given the limited information currently available, it’s difficult to assess whether these projections are realistic or – as with the “Safe Mortgage 2%” – significantly underestimated. The scale of the government’s misjudgment was significant. After only four months, the “Safe Mortgage 2%” scheme resulted in a six-fold overreach of the proposed budget allocation.
The new program qualification criteria will assess the previous six months’ earnings, with a maximum monthly gross income threshold set at: 10 thousand PLN for a single-person household, 18 thousand PLN for a two-person, 23 thousand PLN for a three-person, 28 thousand PLN for a four-person, and 33 thousand PLN for a five-person household. Singles will be eligible for preferential loan conditions up to 200,000 PLN. If a couple, or single parent, applies for the loan, the amount increases to 400,000 PLN. A three-person family can apply for 450,000 PLN, and a four-person family for 500,000 PLN of preferential loan, which can be combined with a standard mortgage to borrow the required sum.
Properties are expected to retain their value, and investing in property in 2024 should provide protection against inflation, especially considering that the average annual CPI inflation for 2023 is expected to exceed 11%, but drop to around 4% in 2024.
“Especially smaller apartments should prove to be good capital investments,” evaluates Kuba Karliński, Magmillon. “In 2023, depending on the city, rents increased by up to 20%, and since there is nothing available to rent on the market, it is a good sign for those considering this type of investment.”
