PKO BP Analysts Expect Rise in Apartment Transaction Prices

Analysts at PKO BP's economic analysis department anticipate a 3-4% rise in average apartment transaction prices over the next year. This forecast is driven by both increasing demand and upward pressure on supply.

Factors supporting higher demand include growing household incomes, enhanced borrowing capacity, lower interest rates, and competitive banking offers. The primary demand will continue to come from individuals purchasing for their own use. Investors, however, remain cautious due to regulatory uncertainties surrounding rentals and potential taxes on "excess" housing or cadastral taxes.

On the supply side, several factors contribute to price increases. These include a gradually shrinking inventory due to a slowdown in new projects, rising costs from regulatory changes like technical conditions and planning reforms, and high construction service prices. Additionally, land prices have increased, partly due to planning reforms.

The geopolitical situation, particularly de-escalation in the Middle East, could lead to price reductions for construction materials that were stockpiled in March and April. This could help curb inflation and support expectations for further interest rate cuts in the medium term. In the first quarter, transaction prices remained largely stable year-on-year, with slight increases in smaller provincial capitals and slight decreases in Warsaw. Investor activity has decreased recently.