Poland: Sales of new flats in six major markets fell q/q by 23% to 11,000 in Q1
The number of new flats sold in six major cities (Warsaw, Krakow, Wrocław, the Tri-City, Poznań and Łódź) amounted to 11,000 in Q1 this year, down by 23% q/q, according to JLL data. In total, almost 16,700 new flats were on offer in the six main markets, 4.7% more than in the previous quarter. At the end of March, buyers could choose flats from a pool of around 42,400 units, 17.2% more than three months earlier.
"Housing sales data for Q1 2024 (which also includes paid reservations in JLL's methodology) turned out to be in line with expectations: the end of the acceptance of applications for subsidised loans led to a reduction in sales. In total, in the six main markets [...] developers sold 11,000 flats in Q1. The decrease compared to the previous quarter was nearly 23%. However, the lower sales, in addition to the end of the BK2 programme, had other reasons: caution of investment buyers, fairly average sales of unsubsidised housing loans, the winter season when sales are always a bit weaker, uncertainty of some cash buyers about the further situation on the market, and in several cities still a rather limited offer, with high prices," said Housing Strategy Advisor at JLL Kazimierz Kirejczyk.
"In relation to Q4, sales declines in most cities amounted to around 20-30% (except Poznań and Łódź), but if one wanted to measure the impact of BK2 loans on sales in the past year one would probably have to compare current sales with the average of two quarters of last year. A comparison of sales from Q1 2024 with the average from Q3 and Q4 2023 shows the largest declines in Wrocław (-37%), the Tri-City (-35%), and Warsaw (-32%). There was also a fairly large decline in Kraków (-26%). In Poznań and Łódź, the declines calculated in this way were much smaller (-13% and -4% respectively), but it was in Łódź that sales were better in Q4 than in Q3. However, if one were to take Q2 2023 as the benchmark for Łódź, then the declines would be similar to those in other cities. All in all, such declines are not surprising - on average, the additional positive impact of '2% loans' on sales in the second half of the year can be estimated at around 25-30% , while in Q1 2024 we had a lull between the end of the subsidy programme and the next one," Aleksandra Gawronska, director of the Housing Market Research Department, added.
The first quarter brought, for the second consecutive quarter, a fairly high number of units launched for sale. A total of almost 16,700 new homes were on offer in the six main markets, 4.7 per cent more than in the previous quarter. The number of new introductions was higher than sales for the second quarter in a row. At the end of March, buyers were able to choose flats from a pool of around 42,400 units, 17.2% more than three months earlier, it was reported.
The volume of new supply in relation to the scale of the markets and sales, however, varied strongly across the metropolitan areas. In Krakow and the Tri-City, the numbers of flats introduced and sold were close to equilibrium, in Warsaw we recorded a moderate surplus over sales (about 25%), while in the remaining cities - a clear or even huge advantage of new introductions over sales: by 86% in Łódź, more than double in Wrocław, while in Poznań the new supply was as much as 2.4 times higher than sales. This was over 3,000 flats, which meant that a total of almost 6,500 units entered the Poznań market in the past four quarters, almost as many as in the Tri-City and only a few hundred less than in Wrocław. It can be considered a sensation that the largest number of flats after Warsaw in the last four quarters appeared on the market in Łódź: nearly 8.1 thousand. In Wrocław, such a scale of offer replenishment was insufficient to make up for the supply backlog of the last two years and the offer remained at a rather low level, while in Poznań it began to approach the previous peak of Q1 2019, while in Łódź the offer, already at the highest level in the history of the market, broke another record and exceeded 7.7 thousand units. In terms of the number of units offered for sale, Łódź was still in second place after Warsaw at the end of March. If the current sales pace were to continue there, it would take more than a year and a half for such a number of units to sell out. Despite the increase in the size of the offer, strong differences between the individual markets in relation to sales volumes are still visible. In Warsaw, Kraków and Wrocław, the offer is clearly lower than the long-term average, and the rate at which the offer is sold out indicates an excess of demand over supply. The situation is similar in Tricity, where the offer is close to the long-term average, but sales are still high. The situation is different in Łódź, where, despite good sales, the record offer, slowly approaching 8,000 units, indicates an oversupply. Against this background, the market in Poznań is closest to equilibrium, with an offer slightly exceeding the annual sales level, the company reported.
The average prices of the units that remained on offer at the end of March 2024 increased the most compared to the end-December prices in Łódź (7%), and the least in Warsaw and Wrocław (0-1%). In the remaining cities, the increases ranged between 3-4%. In the 12-month period, the highest increases took place in Krakow and the Tricity (ca. 26% each), in Warsaw, Poznań and Łódź - ca. 19-20%, and in Wrocław - 12%. In all cities except Warsaw, flats with average prices higher than in the previous quarter were introduced for sale. In Q1 2024, the most expensive flats were introduced to the market in Kraków, where their average price amounted to PLN 16,900/m2. The lowest prices of new supply were recorded in Łódź (PLN 11.8 thousand/m2). In Warsaw, one can speak of stabilisation at the level of approximately PLN 16,100/m2. In the first quarter, the average prices of units sold increased significantly in all analysed cities, which meant new record levels. As a result, they came close to the offer prices and the prices of units put on the market. On a quarter-on-quarter basis, the highest increase in average offer prices of flats sold took place in Krakow - as much as 14.1%, and the lowest - but also relatively high - in the Tri-City (5.6%), according to JLL data.
Source: JLL and ISBnews
