News Article interview JLL Poland residential
by Michał Poręcki | Interview

Aleksandra Gawrońska, Director, Head of Residential Research at JLL Poland talked to Property Forum about the current recovery of the Polish residential market, the stance of banks financing new investments and the possible scenarios for the nearest future.


In the first quarter of 2023, residential sales have definitely recovered, and developers are also pinning high hopes on the government's „Bezpieczny Kredyt 2%”('2% Secure Loan) programme, which is due to come into effect in the summer. Are we just seeing the 'beginning of the end' of the slowdown in the Polish residential market?

Most market participants would probably like to breathe a sigh of relief and say that the worst is behind us. After the events of 2020, when sales offices were closed and consumers’ sentiment collapsed, the following year we experienced dynamic sales growth. This was the result of interest rates reduced to virtually zero and money from various social transfers that appeared on the market and destabilised the supply and demand relationship. The circumstances of 2022, the war, inflation and the collapse of the mortgage market, on the other hand, meant that demand was again severely curtailed.

Today, we once again have a reversal of the trend and another factor that will probably influence future sales quite strongly and cause residential demand to revive. The „Bezpieczny Kredyt 2%”(‘2% Secure Loan’) programme for first-time buyers already in the first quarter caused some buyers to accelerate their purchase decisions, somewhat out of fear of a lack of offers or possible price increases. In the past three months, developers sold more than 11,400 flats in the six main markets, which was a 34% better result compared to Q4 2022 and even better than sales in Q1 last year. Probably, the majority of market participants expect a further increase in demand in the following months and their decisions will depend on, still changing, information on the details of the new program.   

Aleksandra Gawrońska

Aleksandra Gawrońska

Director, Head of Residential Research
JLL Poland

Aleksandra is Head of Residential Research at JLL, responsible for monitoring the housing market and drawing up reports about new homes markets in selected Polish cities. Her main tasks include the preparation of market analyses for external clients: developers, funds and companies related to the housing market. She has extensive experience related to the commercial real estate market, acquired over her 8 years at the international consulting company Colliers International, where she was responsible for publications, reports and analyses on the office real estate market in Poland. In 2018, she joined the Market Research team at REAS, which as of 1 December 2018 became a part of JLL. She is also the author of articles in the trade press and publications containing analyses of the residential market in Poland.  She graduated from the Faculty of Management and Production Engineering at the Warsaw University of Life Sciences (SGGW). She also completed postgraduate studies in Real Estate Management. More »

The increased demand has not been followed by a correspondingly high supply, but instead by inflation, high prices for building materials, energy resources and general contractors. In this situation, is a return of the market to a path of price increases inevitable?

On the developers' side, we are still seeing a great deal of caution. The number of newly launched flats for sale was very low for another quarter in a row - less than 6,900 units in January-March 2023. Also, data on construction starts indicate that the supply side is much less flexible and slower to react to changing conditions in the market environment. Admittedly, demand has started to rebound, but other elements related to the process of housing starts itself have not changed much. Inflation remains at a high level and prices of construction materials or contracts with construction companies are high and cause a clear barrier for a quick expansion of a new supply.

There are cities where the offer, i.e. the number of flats remaining for sale at the end of a given quarter, has shrunk considerably. In Warsaw or Wrocław, the offer levels are definitely below the long-term average, less than 12,000 flats and 6,700 units, respectively. The increase in average prices which we observed in the past quarter in most large metropolises was moderate: +2-3% q-to-q. Probably in the coming months, the fastest growth will be in the prices of units most sought after by first-time buyers, i.e. smaller, 1-2 bedroom flats.

The previously enthusiastic sentiment in the rental market is starting to wane somewhat. Is buying a flat for rent still a good investment for the average John Smith?

The Polish residential market still suffers from a huge shortage of flats, which, due to the war, has been further exacerbated by the migration of people from Ukraine. Problems with the availability of flats for rent are still evident and this makes purchasing flats still a popular form of investment. A factor that has influenced the decision of potential buyers in recent months has been the government's announcements about limiting the purchase of flats for rent or taxing them higher. It should be noted that rents are still at a fairly high level and the y-o-y increase in the large markets was between a dozen and even 30%.

How do banks currently approach the financing of new residential developments in Poland?

The problem with taking a loan should not currently be that the developer has a sufficient level of pre-sales. Demand is slowly returning, as evidenced by the results of residential sales in the first quarter of this year. Buyers will get support in the form of the new '2% Secure Loan' housing programme, while developers will still have to take on the challenge of financing new development projects, especially in the initial phase, with loans. Interest rates, despite no increase in recent months, are still at high levels. This means that financing property development investments is much more expensive compared to recent years. In a difficult market moment for the bank, the developer's experience and credit history count, and of course, the risk assessment of the investment in question is also key.  

Immigration from war-torn Ukraine - could it become an important demand group for ownership flats in the future?

For many years, among foreigners, it is people from Ukraine who have been the largest group buying flats in Poland. The number of residential transactions involving foreigners has been growing significantly in recent years. In 2021, there were more than 10,000 such transactions, of which approximately 40% were concluded by Ukrainian citizens. Most likely, we will also see an increase in the number of flats purchased by them in the statistics for 2022. During this period, most Ukrainian buyers mainly needed flats they could move into immediately. Therefore, purchases on the primary market were on a small scale. In the future, the number of transactions will probably increase. It should be assumed that when the war ends, some part of the people will remain in Poland instead of returning to Ukraine and settling here permanently. The housing needs hitherto satisfied in the form of rented accommodation may turn into a demand to buy flats. However, rising prices may be a limitation in this respect.