Apartment prices are breaking records, but developers are reporting great results

Developers listed on the WSE main market and Catalyst sold 23,078 properties in 2023, up 39%. y/y, calculated by the RynekPierwotny.pl portal. Data from the fourth quarter of last year alone. indicate an increase of 60 percent. y/y to 6,014 properties.

“The presented percentage of fourteen leading companies in the domestic development sector with a residential profile, companies listed on the primary market and Catalyst of the Warsaw Stock Exchange, contracted the sale of a total of 6,014 properties in the last quarter of last year, which is a result, not only an impressive 60 percent better year-on-year, but also one of the best in the history of comparable quarterly periods. With one exception that proves the rule, the remaining thirteen showed quite impressive progress from year to year -years, not only in the tens, but in five cases even in the hundreds of percents’- we read in the announcement.

Three companies: Develia, Victoria Dom and Ronson announced historically record annual figures. In contrast, of the four market leaders, including Dom Development, Atal, Robyg and Murapol, only the first of the companies mentioned approached the 4,000 level. of the contracted premises, which were clearly exceeded by all parties two years ago, was replaced.

Where do these results come from?

“The problem is that such a statistically significant increase in the number of contracts for developers is the result of a very low base in 2022, i.e. the first period of a cyclical economic slowdown, which was canceled last year by the initiative of the previous government coalition , which, as part of the election campaign, another home loan subsidy program was introduced in the form of a ‘safe 2% loan’. As a result, as experts from the website RynekPierwotny.pl note, the prices of new apartments have increased. on average by more than 20% in the main domestic metropolises, and the supply of developers is seriously depleted,” we read further.

“However, the overall outcome of last year’s tenders, although appearing above average and certainly satisfactory in the current difficult economic times, may give rise to rather mixed feelings. The total result of 23,000 units sold is exactly 5,000 units worse than the record result of last year 2021, which, taking into account the fact of strong demand stimulation in the form of ‘BK2%’, raises concerns about the continuation of the good sales streak of the primary housing market this year,” it added.

Investors unsure about government policy

Despite the promising prospects for economic development in the domestic primary housing market, confirmed by the declaration of the new authorities to continue vigorously stimulating housing demand with a new generous tranche of mortgage subsidies, this time under the banner of “Mieszkania na start” , the The indicator for the market sentiment of development and real estate companies has been at the level for almost four months and is in a fairly clear downward trend. However, what is more interesting and rather worrying is that the index remains clearly at odds with the decidedly ‘bullish’ trends of the main WSE indices, with WIG and WIG20 leading the way, as noted in the material.

“The question is: where does this kind of situation come from? It seems that investors on the stock markets are not entirely sure of the positive effects of the theoretical saving role of the housing policy of the subsequent governments, which consists of quite mindlessly adding billions of zlotys. This kind of development path for the national housing sector, which consists of continuous stimulation of demand without active support for the creation of sufficient supply, is a rather risky single-objective game, which may lead to the primary housing sector market closing down in the near future ends up in a dead end,” the portal’s experts wrote.

Source: Do Rzeczy