After the sales breakdown in Q4 2008 which prevailed also in the fi rst months of the current year, H1 2009 brought fi rst signals of stabilization or even
a certain improvement of the situation in the market of new residential units in the main Polish cities. This improvement results from a number of factors: a signifi cant reduction of the number of investments started, price slump, as well as a gradual return of buyers to the market, accompanied by the stabilized conditions of granting mortgage loans. Also the relatively calm course of the economic slowdown in the country has contributed to creating a more optimistic climate in the residential market than three quarters ago.

Although the global sales has not noted a spectacular increase, due to the simultaneous drop in the offer volume in most cities the proportion of the number of units sold compared to the number of units in the offer has improved greatly.


After H1 2009, statistics published by the Central Statistical Offi ce of Poland (GUS) in the category “dwellings started” by developers (“for sale and rent”) clearly indicate a crisis in residential construction. The number of dwellings started within that period did not exceed 19,000 countrywide, which signifi es a decrease by approximately 50% as compared to H1 2008.

However, according to data acquired by REAS, after H1 2009 less than 4,000 new residential units were launched for sale in Warsaw, Krakow, Wrocław, the Tri-City, Poznań and Łódź.

Approximately 60% of all residential units constructed in Poland are built in these six markets.

Even if some part of launched investments did not appear for sale though their construction has already started, it is highly unlikely that their number signifi cantly exceeds half of the amount published by GUS. Most probably a large portion of constructions appearing in the statistics as “started” in fact have not been launched yet. As a result, it seems justifi ed to assume that in reality, the scale of construction decrease in the development sector in H1 2009 as compared to the analogous period of the year 2008 reaches approximately 75%.

For further development of the situation, it will be of key importance whether the banks decide to grant loans on a larger scale, predominantly mortgage loans but also investment loans for development companies. Mortgage loans for individual buyers are fundamental when it comes to the sale of already implemented investments. However, launching new development projects depend mostly on whether the companies receive fi nancing from the banks, or not.


Today it is hard to imagine that the board of any company would risk starting to develop a residential project without secured financing. Meanwhile, the results of crediting action announced by the Polish Bank Association after H1 2009 indicate an ongoing trend of reducing the fi nancing by approximately 55% in comparison with H1 2008. It is also hard to expect that in the coming months the banks will signifi cantly change their politics regarding the developers.

As a result, the supply deficiency scenario becomes increasingly probable for the year 2010. In the meantime, the currently implemented constructions will be completed and due to the lack of new commissions, some construction companies will reduce employment, just like producers of certain building materials. The longer the period of limited activity lasts, the harder it will be to rebuild the production and implementation potential of the industry when prosperity returns, and also the slower the supply will increase at the beginning of the new cycle.

From the perspective of development companies, it seems that the worst period for the market is already over.

Despite the problems with obtaining mortgage loans faced by potential buyers, the sales in Q2 2009 has signifi cantly increased as compared with two previous quarters. In six agglomerations which constitute approximately 60% of the market of residential units for sale, and in the value depiction - approximately 75%, some 5,800 units were sold in Q2 2009, ca. 32% more than in Q1 2009 and almost as much as in Q2 2008.

It is worth emphasing the fact of a relatively small scale of the surplus of supply over demand.

At the end of H2 2009 the total volume of the offer in six considered cities (Warsaw, Krakow, Wrocław, the Tri-City, Poznań and Łódź) amounted to approximately 31,000 residential units and ca. 7,000 among them were ready for occupation and unsold. If we assume that a balanced market should offer for sale at any given time a number of units approximately equal to the yearly amount of sales, then the surplus at the end of June 2009 (the surplus of residential units in the offer over the sales in the previous 4 quarters) in six analyzed markets can be estimated at circa 9,000. However, we need to bear in mind that the sales in the previous four quarters were significantly limited by the lower credit accessibility, and the index presenting the number of residential units constructed yearly for sale per 1,000 inhabitants in Poland has been oscillating on average at a level of 1.2. Consequently, the current level of the offer country – wide – which translates into an index of ca. 1.3 new residential unit for sale yearly per 1,000 inhabitants – can hardly be deemed high.


The second half of the year 2009 ought to be slightly more favorable than the first one for several reasons:

• the prices are already signifi cantly lower and are likely to stabilize,
• the supply is not growing and the potential buyers will gradually realize that in the coming quarters the selection of residential units will diminish,
• the credit action will probably remain on a similar or a slightly higher level than in H1 2009.