Real estate price forecast for 2023
The year 2022 has shown us that nothing is really certain, and most things are just assumptions.
In 2023, real estate prices may increase minimally, but to talk about any forecasts, we need to segment the real estate market.
Why?
Because different forecasts are predicted for houses, and others for “small” apartments or premium properties.
Here’s what the arguments are for rising, falling and holding prices in each segment.
PRICE GROWTH
Apartments up to 50 sqm, as well as studios, are still in demand, here prices will probably increase. Costs of workmanship, construction are constantly increasing, so necessarily properties will be more expensive.
The increase in prices is also dictated by the fact that developers are limiting new investment, and at the same time, due to inflation and as a result of the increase in interest rates and thus much lower creditworthiness, people interested in buying will purchase smaller properties.
At the same time, there will be fewer such apartments relative to the number of customers, causing prices in the area to rise.
In 2022, very negative factors acted: war, high interest rates, inflation. These factors have caused significant quantitative declines in property sales
(transactions concluded), as well as the volume of mortgages granted.
An opportunity for slow growth and recovery of the market is the reduction of interest rates, This will be a factor that will significantly improve and revitalize the real estate sales/purchase market and influence the conclusion of more transactions. Increased demand, in turn, may cause prices to rise slightly.
However, when will they start to fall? It is difficult to say. Will it be in the middle of the year or at the end?
The second factor that will affect real estate prices and at the same time revive the market to some extent is the introduction of the First Apartment program, which is planned for mid-year. The program is (in a nutshell ) subsidies for loans, i.e. their fixed interest rate of 2%. However, we still have to wait for its introduction.
PRICE DECREASE
Larger apartments, as well as houses, have usually been credited, so here prices may realistically fall slightly around 5%.
Why?
The creditworthiness of potential customers is much lower. Those interested in buying will be able to afford smaller areas than before. This segment has suffered the most and at the same time will take the longest to recover.
Although the aforementioned program does not stipulate a square footage limit, customers are more likely to be cautious when buying their first apartment.
PRICE MAINTENANCE
If we consider prices after taking inflation into account, we can talk about a decline in prices, but in nominal prices they are at the same level.
However, if we take into account the weak demand for the purchase of real estate, or the fact that interest rates will not fall and there will continue to be a low volume of lending, then prices will hold.
In addition, there are currently still few mortgage applications, and the central bank’s recommendations for determining creditworthiness, i.e. that ability should be calculated as if interest rates were 5 percentage points higher, definitely do not improve the situation. That is, we can say that compared to the previous year, the creditworthiness of the average Pole has decreased by 50-60%. This is also a factor that is holding back lending and slowing down the market.
To sum up: prices in 2023 will remain at the same level or there will be small price increases in individual segments.