The increasing demand in the real estate market has its dark side – a cascading increase in apartment prices. Warsaw remains a leader in this regard, but the price per square meter is increasing fastest in Krakow.
Dynamic price increases
As reported by Rynekpierwotny.pl, in September 2023, the average price per square meter of a new apartment in Krakow exceeded PLN 15,000. The local market stands out among other Polish agglomerations with the highest average price dynamics – an increase of up to + 28 percent over the year. For comparison, in Warsaw it was + 18 percent, in Katowice + 23 percent, in Wroclaw, 14 percent, in Poznan + 13 percent, and in Trojmiasto + 19 percent.
Apartments in Krakow and Warsaw lead not only in terms of dynamics but also considering the price per square meter. Rynekpierwotny.pl calculates that the expenditure for this in the capital is currently around PLN 16,000, while in Krakow it’s PLN 15,200. Other agglomerations remain relatively less expensive, although buying an apartment also involves putting aside a large sum of money. In Trojmiasto, the square meter price is PLN 13,600, in Wroclaw PLN 13,000, in Poznan PLN 11,600, in Lodz PLN 9,000, and in Katowice – over PLN 10,000 – “For some time now, we have observed a clear trend in the Polish real estate market regarding rising apartment prices, so it’s hard to talk about the existence of “cheap” cities or regions where it’s possible to buy an apartment at an attractive price. Of course, the most expensive places are in city centers and surrounding districts. In Krakow, this applies to the Old Town, Grzegorzki district or Zwierzyniec. However, dynamic increases are also observed in other areas of the city, which formerly were considered relatively cheap,” says Karolina Opach, sales manager at Q3D Locum.
Supply can’t keep up
So what’s causing such drastic apartment price increases? The primary reason is the constant supply shortage. As informed by Puls Biznesu, in Warsaw, Krakow, Trojmiasto, and Wroclaw, developers’ investment activity this year is too small compared to the demand. In these agglomerations, developers have sold more apartments than they have introduced to the market. For instance, in Warsaw in a period of seven months, there were 12.5 thousand willing to buy, while the market saw about 6.3 thousand new apartments built in that time. These statistics are reflected in data presented by the GUS. We learn from them that the number of apartments for which construction permits have been issued or which have been reported with a construction project in the period from January – August 2023 amounted to 151.2 thousand, i.e. 29.8 percent less than in the same period in 2022. Additionally, the construction of 119.8 thousand apartments began, a number 19.5 percent smaller than last year. Meanwhile, 145 thousand apartments were completed and put into use, i.e. 0.2 percent less y/y.
It’s clear then that the supply of apartments has significantly lagged recently. BIG DATA from RynekPierwotny.pl also shows that at the end of September, developers in Krakow had 49 percent fewer apartments than nine months ago. Meanwhile, the apartment offer in Warsaw shrank by 40 percent in that period. In Trojmiasto, the reduction tallied at 25 percent y/y. – “Currently, rising construction costs are one of the biggest obstacles to the development industry and negatively impact profitability of projects. High inflation affects not only the prices of construction materials such as steel, concrete and wood, but also labour costs. Another factor is the price of land for housing development escalating, which now reaches very high assessments. In such a changing environment, it’s harder for investors to decide to start new projects,” says Bartłomiej Rzepa, a board member of Osiedle Symbioza. – “Additionally, administrative procedures are also a problem. The waiting time for a construction permit has extended from 6-9 months to about 1.5 or even 2 years,” he adds.
