The results of the monitoring study conducted by REAS after Q1 2010 confirmed that the situation in Poland's largest residential markets (Warsaw, Kraków, the Tri-City, Wroc³aw, Poznañ and £ód) is close to the state of balance. Despite a slight increase, the offering volume reached a level similar to the long-term average annual supply and absorp-tion, while the number of residential units launched for sale was similar to the number of units sold.
This scenario resulted from several factors:
- further, though slow, liberalization of banks' rules for granting mortgage loans,
- improvement of the customers' moods due to positive signals about Poland's eco-nomic condition from the media and opinion forming circles,
- further, though less dynamic, price reductions,
- adjustment of the new offering to the decreased purchasing power of potential clients, occurring predominantly through launching smaller dwellings to the market.
At the same time, the diversification of the demand/supply ratio in specific segments of the market is becoming increasingly prominent.
Supply
After a dramatic drop in the number of new investment projects launched by developers in Q1 2009, Q1 2010 brought a clear reversal of the trend. According to preliminary statistical data published by Central Statistical Office (GUS), in Q1 2010 developers commenced construction of over 11,500 flats and single-family houses in Poland, i.e. 53.4% more than in the analogous quarter of 2009. Bearing in mind the harsh winter and the fact that the first quarter of the year usually registers the lowest number of construction starts, these figures have to be seen as a sign of optimism from the Polish developers. However, in many companies, the stock of residential units is beginning to decrease, therefore they need to start implementing new projects in order to conduct their sales process in a smooth way.
In six considered agglomerations, during Q1 2010 approximately 6,200 dwellings were launched to the market, i.e. slightly over 50% of the number of units started in that period in Poland.
At the same time, statistics confirmed that in the passing business cycle, Poland has already experienced the peak number of units delivered. In Q1 2010, a total of under 34,000 dwellings were delivered country-wide, over 18% lower than in the analogous quarter of 2009. In that time, developers delivered 13,700 units, 24% less than in the previous year. In all probability, results noted for the whole year 2010 will also prove proportionally lower.
The current supply constituted by units under construction and already delivered yet unsold dwellings is undergoing rapid structural changes. At the end of Q1 2010, there were circa 4,500 completed unsold dwellings in Warsaw, and in the six discussed agglomera-tions their number amounted to slightly over 9,000. In the medium-run, this was probably the highest number of completed units ready for occupancy available on the market. Unless we experience a demand reduction, their number should gradually decrease in the coming quarters.
At the turn of 2008 and 2009, market offering was dominated by dwellings scheduled for completion in 2009, comprising 58% of the offering, but completed units had only a 14% share in the offer. At the end of Q1 2010, completed units constituted 27% of the offer, and dwellings scheduled for completion in 2010 - approximately 33%.
The crisis resulted not only in a reduced scale of the market and the return to long-term average figures registered during the previous ten years when it comes to offer volume, but also the number of transactions and number of residential units launched for sale. It is also responsible for the fact that large development companies, which enjoy higher trust from both the clients and financial institutions, have started to play a more significant role in the market. These developers, in turn, have a rather big stock of projects under building permits and are able to smoothly launch their implementation. Since construction costs have dropped c
