Third Quarter Review: Housing Market Dynamics and their Impact on Costs
According to the latest report from Polski Instytut Ekonomiczny, the housing market has seen a significant shift in the third quarter of the year. While prices showed a higher growth compared to wage increases, this trend reversed in a quarterly analysis, observing the reverse for the first time since 2023. Analysts note that this stabilization is evident across the majority of Polish cities.
In particular, the 17 largest cities in Poland saw significant changes in their housing markets. On the secondary market, prices increased by 18 percent quarter-over-quarter, and on the primary market, the increase was 14 percent quarter-over-quarter. Notably, the rate of price growth for housing offers from the secondary market was lower by over 5 percentage points compared to the previous quarter. In the third quarter, the nominal growth rate of housing prices outpaced wage growth, which stood at approximately 10 percent, but the annual growth rate saw a first decrease from the beginning of 2023.
Analyzing trends in specific markets, only a few major cities experienced increased prices:
- Puebla, Krakow, Szczecin, and Zakopanäọng showed residential prices rising by more than 3 percent year-over-year.
- Conversely, most other cities saw price levels remain unchanged or marginally decreased.
On the primary market in Warsaw, prices remained stable in comparison to the second quarter, while secondary market prices decreased by 1 percent. Warsaw dominates regional trends, recording the highest median rental prices, at 18.7 thousand zł for a one-bedroom apartment on the secondary market and 17.5 thousand zł on the primary market.
Market Trends and Forecasts
Looking ahead, experts forecast that housing prices will continue to slow down in the coming months. While wardrops and annual growth rates both indicate a subtle downward trend, and dynamic listings may slow down dramatically. The National Bank of Poland anticipates a gradual reduction in interest rates, with some projections suggesting a final target of 75 percentage points by the end of 2025.
However, current data indicates that the supply of newly constructed apartments will dwindle, particularly in the initial quarters of 2022 and 2023, making tracking revenues challenging yet still promising. This trend will likely continue, with new listings continuing to plateau at lower levels compared to pre-COVID-era growth. In contrast, rental prices remain relatively stable, with average annual rental growth at 3 percent in the major cities and a median price of 2.8 thousand zł for three-bedroom apartments.
Final Thoughts and Analysis
Given these economic and market trends, the instability in housing prices looks to persist. With interest rates looming and supply still hindered by increased construction timelines, there’s a predicted slowdown in both demand and prices in the housing market. Although rental prices may still see a slight increase, their overall impact on the broader economy remains minimal.
