“A Man with Cash is King”. Changes are anticipated in the real estate market, and the number of mortgage applications is at a record low.
In November 2024, there were the fewest mortgage applications submitted in many years. The year-on-year decline amounts to over 13,000 applications. This decrease is also noticeable when looking at the month-to-month numbers, with drops of around 20%. Real estate market experts aren’t surprised by the situation, although there were some expectations that the end of the year would be slightly better. “It’s not that there are no transactions happening at all. There are quite a few, especially in the secondary market, when the prices become more attractive or when sellers are able to negotiate the prices listed on advertisement portals”, says Mirosław Król, a real estate market expert.
“I know of developer investments that have only sold 10-15% of their space”
The recent property performance data is not particularly good for the construction sector, as the year-to-year decrease in the number of mortgage applications is noticeable. The situation also looks poor when considering the number of applications in October 2024 compared to November 2024.
“Some people expected the end of the year to be a bit better. However, the situation looks quite the opposite, as not much is changing in the market. The number of apartment offers is increasing in both primary and secondary markets, but the number of clients is not. Many people are watching, pondering, but still believe that prices will start to fall soon or that the Government will announce a new housing program that they will be able to take advantage of”, says Mirosław Król, a real estate market expert.
He adds:
“I know of developer projects that have only sold 10-15% of their space, and construction has already finished. A few years ago at this stage, almost all of the building or residential estate would have been sold. Customers are really waiting for price drops, and developers are not planning to allow this drop to happen quickly. This causes an increased interest in the secondary market”, admits Mirosław Król, a real estate expert.
“Cash is King”
What may be surprising in the current situation on the real estate market? Mirosław Król highlights two things- the first is less apartment sales for renting out, and the second is the crushingly small number of cash customers.
“You could say that a person with cash is king in today’s real estate market. A customer who is able to immediately pay for an apartment from a developer or on the secondary market can count on the largest discounts. The market needs a constant flow of finances, and mortgage customers are more difficult than a customer who pays and receives, and there are really very few of such customers. Although developers are offering rather symbolic discounts, on the secondary market, the “price negotiable” if we pay cash, can reach up to 15-20% in record cases”, says Mirosław Król.
“Recently, fewer apartments are being sold ‘for investment’. This means that even those involved in renting out are not deciding to purchase counting on high inflating prices to start falling. Currently, the return rate from renting is becoming unprofitable, and the investment risk is high, so there are fewer transactions”, Mirosław Król adds.
Experts do not foresee a major price correction in the last month of 2024 and the first quarter of 2025. However, changes might come as early as spring. “Sooner or later, the market will have to respond to the fact that apartments are not selling”, he added.
Source: https://managerplus.pl/kto-ma-gotowke-ten-ma-wladze-na-rynku-nieruchomosci-klient-z-pieniedzmi-jest-teraz-na-wage-zlota-23562
