A sharp decline in the number of new flats compared to February 2014 and this January does not indicate that the development sector finds itself in a bad condition. This is caused chiefly by the downturn of 2013, when the number of construction works started was the lowest since 2006. However, March GUS figures confirm the positive trend which has lasted since early 2014 – a growing number of granted permits and opened development works.
In February 2015, new investment in development grew by 35 percent compared to February 2013, which was particularly difficult for the sector. With regards to permits issued, the dynamics in this period was 52 percent. This suggests that developers and private investors positively assess the perspectives of Polish economy in the coming years. These expectations are corroborated by the March National Bank of Poland report on inflation in which the prognosis for GDP growth in 2015 was raised from 3 percent to 3.4 percent. The economy is expected to continue growing at a rate of at least 3.3 percent which means that the demand for flats – with low interest rates –will grow.
The main NBP interest rate is now 1.5 percent and the risk of it growing before the end of 2016is minimal – both because of the declaration made by the Monetary Policy Council stating that it wanted to keep interest rates unchanged until the end of its term and the forward rate agreements (FRA). March inflation prognosis shows a much lower path than the simulations made in November: in 2015 and 2016 annual price dynamics are expected to be -0.5 percent and 0.9 percent respectively, while later prognoses suggested a growth of 1 percent and 1.6 percent.
The fall of consumption prices in Poland is not caused by a break down in credit action or the financial crisis, so it poses no threat to the condition of the real estate market. Quite the contrary is true: low consumption price dynamics (CPI) translates to interest rates and in turn lower costs of financing investments in new flats or houses. At the same time, households’ and domestic investors’ purchasing power grows parallel to the GDP, which has a decisive impact on the demand for real estate. One should also keep in mind that the stock flats per capita in Poland is still one of the lowest in Europe.
Damian Olko, expert of the Research and Analysis Centre of Employers of Poland