The number of apartments whose construction was initiated by developers in March 2024 increased by 43.2% year-over-year and 11.2% compared to February 2024. Although there was a slight decrease in the number of apartments being completed, there is a dynamic rebound after the recent slowdown. In the coming weeks, promotions are also expected, though without a radical impact on prices. Developers who have apartments in projects launched before July 1, 2022, aim to sell them before July 1, 2024.
Why are developers in such a rush? On July 1, 2022, a new law on the protection of residential property buyers and the Developer Guarantee Fund came into effect. Fearing the complications associated with the initial stage of the new law’s implementation, many investors preferred to start constructions under the old regulations. Those who started selling before July 1, 2022, were able to build under the existing laws for two years, including selling apartments without contributing to the Developer Guarantee Fund and without registering with the Fund. After July 1, 2024, all developers will have to sign contracts based on the new regulations.
Time Until July 1
Due to the additional formalities and costs of the new regulations, we can expect many promotional offers in the market in the next two months. Developers will want to sell off their properties, primarily those investments where only a few, a dozen apartments are left. If these are not sold now, by July, all contracts will involve new formalities and obligations, including contributions to the Developer Guarantee Fund, explains Przemysław Dziąg, director of the legal department at the Polish Association of Property Developers.
This is confirmed by Katarzyna Kuniewicz, head of residential market research at Otodom Analytics: “Data from the seven largest housing markets and their agglomerations indicate that developers currently offer 65,200 apartments and houses. The pool of properties introduced before July 1, 2022, amounts to 11,300 units. These are the properties that—unless sold before this July—must comply with the new law protecting residential property buyers. Therefore, I assume that some developers, to avoid additional formalities, will decide to offer these apartments on promotional terms,” she adds, “We are entering a period of promotions, but without a radical impact on the average property prices, which seem to remain in an upward trend.”
Beat the Amendment of Technical Conditions
Developers are not idle. GUS statistics for March show that they have started digging for new investments. The number of apartments they began building increased by 43.2% year-over-year to 15,764, and by 11.2% on a monthly basis. From January to March 2024, developers started the construction of 41,994 thousand apartments, 79.3% more than in the same period last year, though such a significant percentage increase is due to a low base from the previous year. Such strong results have not been observed for a long time. What is the reason? The enthusiasm for investment among developers was boosted by the announcement of the “Housing on Start” program, but primarily by the fact that an amendment to the technical conditions was supposed to come into effect on April 1. The desire to invest according to the existing regulations was a major factor favoring new investments.
The good March results regarding the start of new investments are undoubtedly related to the changes in the regulations on technical conditions, which were supposed to take effect on April 1. Under the banner of combating “pathodevelopment,” these changes were introduced, which could have led to some projects being scrapped had they not started. However, the introduction of these regulations was postponed at almost the last minute, which corresponds with increased activity among developers. Another factor is likely the announcement of the “Housing on Start” program. However, it is too early to speak of market stabilization in terms of supply, comments Przemysław Dziąg, PZFD.
Other factors also influence the supply on the largest markets in Poland. Domestic investors claim that there is a lack of suitable land. They also point to prolonged procedures that block the possibility of increasing supply.
