Emmerson: Warsaw primary residential market Q2 2012 (PL)

As data gathered by the Emmerson Market Research Department show, the second quarter of 2012 is a period of increased developer activity on the Warsaw primary residential market. During three months investors introduced into the market 59 new housing projects offering approximately 5,000 dwellings.

The largest number of newly introduced apartments was recorded in Bialoleka, Targowek and Wola. Thanks to the introduction of new supply total offer of the primary residential market in Warsaw reached its record-high level of 20,300 units, and taking into account dwellings booked – over 21,100. It is assumed that developers introduced new projects in order to avoid the regulations of the so called Developer's Act that came into force on April 29, 2012. It is worth noting that in some of these projects dwellings were not available for purchase.

In Q2 2012 developers offered more luxury apartments than before. In one project that came back to the offer – Cosmopolitan Twarda – 250 luxury apartments are available for purchase. Approximately 10 residential projects of 59 newly introduced into the market can be described as high standard apartment investment.

The average price of apartments has remained in the downward trend and currently amounts to 8,200 PLN/m². Comparing to the last quarter of 2009 it translates into a 13.2% decrease. However, not in all districts of Warsaw prices decreased. For example, in Srodmiescie, Praga Polnoc or Wlochy average unit prices of dwellings increased due to the introduction of more expensive apartments.

As a result of decrease in price limit for apartments that qualify for the 'Family on its own' Program (from 6,435 PLN/m² in Q1 2012 to 5,904 PLN/m² in Q2 2012) the number of dwellings meeting new criteria decreased significantly. At the end of March 2012 2,600 apartments were available for purchase within the governmental program, while at the end of June – 1,300 dwellings. It is worth emphasizing that nearly 79% of all units qualifying for the Program are located in Bialoleka, other are located mainly in Ursus and Bemowo.

Above mentioned factors (price drop and significant increase in the offer volume) resulted in an increased sales volume – by 300 units. Increase in sales volume might be caused also by the Developer's Act which says that parties of the agreement (purchaser and investor) are obliged to sign a notarial contract.

Following quarter will probably bring further price drop. Due to the huge residential offer investors will be forced to offer competitive prices – especially in the case of dwellings of popular standard. On the other hand price reductions will also result from the lower clients' purchasing capacity. In recent months, due to the tightening of the mortgage loan policy, we observe decrease in the number of mortgage loans granted.

Source: Emmerson

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