In the second quarter of 2024, housing prices in the 17 largest cities in Poland continued their upward trend, accelerating for the fourth consecutive quarter. In the primary market, prices increased by an average of 16% year-on-year, while in the secondary market, the rise was even more significant at 23%. This price growth outpaced the nominal wage growth, which was approximately 11% during the same period.
“In Q2 2024, all cities in the secondary market recorded at least double-digit year-on-year price increases. In the primary market, some smaller cities like Rzeszów, Opole, and Gdynia saw price declines. The fastest price growth in the developer market was observed in Gdańsk (31%), Opole, and Szczecin (both 27%). Contrary to previous quarter predictions, prices in Kraków did not reach 17,000 PLN per square meter, and the quarterly increase in the secondary market did not exceed 1%, while in the primary market it slightly decreased by 0.7%. However, on an annual basis, prices increased by 29.6% and 26% respectively,” said Tomasz Mądry, Senior Analyst from the Sustainable Development Team, Polish Economic Institute.
Modest Rent Price Increases Compared to Sales Prices
The increase in rental prices in the seven largest cities in Poland is significantly slower than the rise in housing sales prices. Rental prices in the most popular segment of 40-60 m² apartments increased by an average of 3.5% year-on-year. The average rental price was 2,800 PLN outside Warsaw and 3,500 PLN in Warsaw. The differences in rental prices between Warsaw and other large cities are more pronounced for larger apartments, reaching up to 30% for apartments of 60-90 m².
“Since mid-2023, there has been a growing disparity between the annual growth rate of housing sales prices and rental prices. June 2023 was the last month where the annual increase in rental prices exceeded the growth in sales prices. Since then, housing sales prices have accelerated, reaching 22% year-on-year in February 2024, while the growth rate of rental prices has significantly weakened. This indicates a decrease in the profitability of buying apartments for rental purposes compared to other forms of capital investment,” noted Jędrzej Lubasiński, Analyst from the Sustainable Development Team, Polish Economic Institute.
Surprisingly High Demand for Mortgage Loans
Despite the end of the government subsidy program for mortgage rates, demand for housing loans in the second quarter of 2024 unexpectedly increased. The number of loan applications reached 86,000, representing a 9% increase compared to the previous quarter and a 20% year-on-year rise.
“With interest rates remaining unchanged and real wages increasing, we expect the number of loan applications to stabilize at a similar level as this quarter, i.e., 20,000-25,000 per month,” said Tomasz Mądry.
Price Stabilization Expected in the Coming Months
Analyses indicate that the pace of housing price growth is beginning to slow down. May and June 2024 were the first months in over a year where price increases did not exceed 2% month-on-month in any of the seven largest Polish cities.
“We expect that in the coming months, housing prices will continue to rise, but at a slower pace than in the last two quarters. We anticipate that this trend will continue, and price growth in Q3 and Q4 will stabilize at around 10% in both markets, assuming the main macroeconomic variables remain unchanged,” concluded Tomasz Mądry.
