Poland apartment sales growing again and prices rising

After a standstill on the residential property market in Poland, the long-awaited revival has finally arrived. The downtime was mainly caused by the lower or no mortgage affordability of potential buyers, which was caused by high interest rates and rising living costs.

It is widely believed that the factor that caused the increase in real demand is the government program “First Apartment”, which was launched in July 2023. Under this program, people buying their first apartment or house benefit from a lower mortgage interest rate of 2%. These are very favourable conditions, considering that the average interest rate on the mortgage is currently 8-9%, depending on the bank. The program does not depend on the size of the property or whether the apartment is purchased on the primary or secondary market, which means that it affects the entire sales market. The only limit is the loan amount, which cannot exceed PLN 500k  or 600k for families with at least one child.

The government helped the buyers of the first apartment further by removing, from 31st August this year, the tax that applies when buying on the secondary market. The tax (PCC) is 2% of the property price, so it is a significant saving of several thousand zlotys.

Lastly, an unexpected cut in interest rates from 6.75% to 6% will also support the purchase of apartments in Poland.

All these government actions translated into a real increase in demand. Developers who have not started new construction in recent months report that the supply on the primary market is not keeping up and prices are rising.

Property investors are in a slightly different situation. The government does not help and even tries to discourage them from investing by increasing the PCC tax. Buyers of sixth and subsequent flats (or shares) in one plot of land will pay 6% tax, this also applies to the primary market. This is an action aimed at limiting package purchases, which reduce the supply for people buying for their own housing purposes and speculative investments, which were very common in previous years. It is worth noting that the increase in PCC tax will mainly affect small and medium-sized investors. Large companies and funds buying apartments for rent will be able to easily obey the new regulations by buying entire buildings, without the need to separate premises.

The Polish real estate market is currently in an interesting moment of development. On the one hand, we have the desire of Poles to own real estate and the government supporting these aspirations and trying to limit the activities of investors. On the other side is the dynamically developing rental sector, especially the institutional rental sector, the economic compulsion to rent, because the prices of flats are constantly rising, making it even with the help of  government programs less achievable.