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Residential real estate market in Poland stablising, report shows

In Poland’s main cities of Warsaw, Krakow and Poznan, the number of residential units launched for sale was similar to the number sold, indicating a balance in the market place, says the report from REAS covering the first quarter of 2010.
A further, but slow liberalization of banks’ rules for granting mortgage loans, an improvement in confidence due to positive signals about Poland’s economic condition and price reductions have combined to help sales increase, the report says.
After a dramatic drop in the number of new investment projects launched by developers in the first quarter of 2009, there is now a clear reversal of the trend. According to preliminary statistical data published by Central Statistical Office developers started over 11,500 flats and single family houses in Poland in the first three months of the year, up 53.4% on the same period in 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,’ the report says.
‘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,’ it adds.
The current supply of units under construction and already delivered but not yet sold dwellings is undergoing rapid structural changes. There are currently around 4,500 completed unsold dwellings in Warsaw, and 9,000 in other cities, 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,’ the report points out.
The upturn is being helped by the fact that large development companies, which enjoy higher trust from both 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 considerably during the previous year, it is possible to maintain an attractive level of profitability of developers’ operations, even considering the reduced prices,’ the report says.
A key to continued growth will be mortgage availability. ‘After a period of cautious lending policy in the first half of 2009, clearly the banks decided to return to crediting purchases of residential units again on new, increasingly liberal terms. Today, the majority of potential clients do not have problems with getting a mortgage loan, especially for smaller, cheaper units,’ it explains.
A demographic boom, an increase in marriages and single people becoming more independent is likely to fuel demand for property in coming years, the analysts also point out. ‘Consequently, the size of an average household is decreasing and the demand for smaller dwelling grows,’ the report says.
But it warns sales are perhaps artificially high because of incentives and price reductions.