The housing bubble in Poland is growing

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Housing prices are rising at an increasingly rapid pace. In 2018, in the largest cities in Poland, according to analysts from Home Broker, housing transaction prices increased by an average of 14.7%. According to research, more than half of Poles claim that real estate prices will never fall. Such absurd beliefs, combined with rapidly rising prices, may lead to another speculative bubble on the housing market. Driven by record-low interest rates, good economic conditions and broad bank lending.

Apartment prices are rising faster and faster
ING Group has conducted yet another study illustrating the housing situation of Poles as part of the “ING Financial Barometer”. The report shows that housing prices are growing at an increasingly faster rate. In 2017, prices rose by 3%, in the first half of 2018 by approx. 6%. According to the latest data, they went up by 14.7% in the whole of 2018.

In a normal market situation, such a large increase would dominican republic whatsapp database most buyers and cause a decrease in the number of new investments. Meanwhile, developers are putting into use over 15 thousand apartments per month, or over 180 thousand premises per year. Having no major problems with selling them. The average time to sell the entire offer is only 3 months.

Absurd optimism and naivety of investors
The period of good economic conditions and a red-hot housing market has changed the views of most Poles. In the latest survey, the number of people convinced that property prices in their area will go up in the next 12 months has increased by 8% (to 64%). Investors in times of record-low interest rates have stopped being interested in bank deposits and savings accounts. Money has therefore started to flow into the property market. What is more, according to another survey, 51% of Poles believe that house prices will never fall. This is 17 percentage points more than in 2017. Such beliefs have been one of the causes of many crises in the past, including the last one in 2008.

Housing investment bubble in Poland
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We quickly forgot about the crisis of 2008-2010. Several years of increases in the prices of flats and houses were enough to change the views of Poles. Expecting that the trend would continue in the future. Many investors, fearing further price increases in the coming years, decided to accelerate their decision to buy. Also people who have satisfied their own housing needs and are buying a second or third flat to rent out.

Many of them are buying with someone else's money, using easily accessible mortgages . Such behavior increases the risk of inflating an even bigger bubble.

Banks are willing to lend higher and higher amounts
According to ING analysts, the value of mortgage loans granted is still growing. At a fairly fast and stable pace. However, nothing lasts forever. The time of low interest rates and cheap mortgage loans will also come to an end. The real estate sector, like any other, is subject to changing market processes. It is of course dependent on the current economic situation, the scale of demand and supply, and government decisions.
Currently, most young people are not able to buy real estate for cash without many years of saving money. Unfortunately, real Polish earnings and the lack of culture and promotion of saving in favor of consumerism are doing their job. We spend instead of saving. The only chance is to take out a mortgage loan. Since the government and banks are currently facilitating access to mortgage loans, they are driving up demand even more, which is temporarily out of supply and we have price increases. More borrowers have to borrow larger amounts, fueling a spiral of absurdity.