Housing Market Slows Down Amidst Uncertainty, But Single-Family Homes See a Boom: Prices Surge by 10% YoY

The second quarter of the current year was a period of uncertainty in the housing market. Buyers, anticipating a new credit subsidy program, were holding off on purchasing decisions. As a result, demand weakened, and housing prices increased only by 1.8% QoQ. However, the situation was different in the single-family home market. Buyers acquired one third more houses than the previous year, with price increases averaging 10% YoY. — This is shown by the latest Residential Quarterly from Otodom and Polityka Insight.

In the second quarter, the housing market observed a slowing down and further curbing of price increases. Average rates increased by 1.8% QoQ, while in the first quarter it was 3.2% QoQ, and in the last months of 2023 over 5% QoQ. At the same time, the number of active apartment sales listings for the entire quarter exceeded 300,000 for the first time in two years. This is due to new developments and a greater number of units being listed for sale by private owners.

And although potential buyers have plenty to choose from, it is clear that they are delaying the decision to buy their own home. This is confirmed by Otodom Analytics data, which shows that sales in the primary market fell in June to a level not seen since mid-2022.

“You can see a sense of anticipation in the market. Many buyers are postponing the decision to buy an apartment, waiting for the government’s stance on the new mortgage credit subsidy program. The announcement of the final shape and dates of ‘Start Living’ will allow interested parties to analyse whether they will be able to benefit from credit subsidies and whether it will be beneficial for them. Only on this basis will they decide whether to finalize the transaction this year, wait for the programme’s launch, or postpone the purchase for later” —emphasizes Dr. Adam Czerniak, PhD, Prof. SGH, Chief Economist of Polityka Insight.

Interestingly, such uncertainty is not seen among buyers of single-family homes.

Home Buyers Not Postponing Purchase

Those planning to buy a single-family home also currently have a record wide range of options to choose from. In the second quarter of this year, the number of such properties for sale reached the highest level in three years. By the end of June, developers offered for sale in 7 major markets (Katowice, Kraków, Łódź, Poznań, Tricity, Warsaw and Wrocław) and surrounding areas over 6,000 single-family homes, 20% more than a year earlier.

Unlike those planning to buy an apartment, potential home buyers are not delaying the execution of their plans. According to Otodom Analytics data, from May to June, almost 1.7 thousand developer’s houses were sold in the seven main markets and their surroundings. That’s 5% more than in the first quarter of the year and as much as one third more than in the same period last year.

“The decision to buy a house is often preceded not only by an analysis of the merits of a location away from the hustle and bustle, but also by an assessment of the consequences of moving out of the city for individual family members. As a result, decisions to buy a house near the city are usually made by families with small children or mature 50-year-olds, whose children already run their own households separate from their parents.” — points out Katarzyna Kuniewicz, Market Research Director, Otodom Analytics.

Analyzing the data in individual segments of the housing market, one can notice that those located on the largest plots and further from city borders are increasing in price slower. At the same time, the rate of increase in active listings in these locations is faster than closer to main centres. This suggests that although we want to live in houses with gardens, we do not want to be too far from major urban centres.

But does buying a single-family home have to mean moving out of the city? Not necessarily. It turns out that many of these offers are located within city limits. In Łódź, as much as 60% of available houses for sale are located in the city itself, and in Kraków and Wrocław, this is 40%.

Dreams of Owning a Home Come at a Cost

The results of Otodom’s “Happy Home. Living on the timeline” report show that over 70% of Poland’s residents dream of owning their own house. However, this dream is becoming more and more expensive. In Q2, segments increased by nearly 13% YoY, single-family properties on small plots by 10%, and those on areas of over 500 sqm by approx. 9%. These are the highest price increases for houses in two years.

How much does one have to pay for the pleasure of living in a developer’s house? The most is in Warsaw and Kraków, where prices are around 11.4 thousand PLN/sqm. In Poznań, buyers should expect to spend around 9.7 thousand PLN/sqm. On the other hand, new single-family houses can be bought cheapest in Katowice (approx. 6.9 thousand PLN/sqm) and in Łódź (approx. 8.2 thousand PLN/sqm).

Interestingly, although in most cities the prices of second-hand houses are lower than those from developers, in the capital of Poland they are higher by approx. 100 PLN/sqm. In June, private owners in Warsaw were asking for 11.5 thousand PLN/sqm, which is 8% more than a year ago. Buyers in Kraków also had to prepare over 10,000 PLN/sqm. Houses on the secondary market in Wrocław and Gdańsk cost just a little less.

“An analysis of average prices per square metre of single-family houses offered by developer companies leads to a simple but false conclusion that the purchase of this type of property is always an attractive opportunity. This is because the differences in average prices per sqm of houses and flats in similar locations reach several tens of percent. The fallacy of such analyses results from the fact that they ignore the clearly larger – as in the case of flats – area of houses. As a result, the total price with which the buyer of a house has to cope is about 10-20% higher than the price of a much smaller flat. Since the group of house buyers should at least remain at the current level in the next few years, an increase in prices per square meter of a house along with a gradual decrease in the area of properties offered by developer companies is inevitable.” — summarizes Katarzyna Kuniewicz.