Housing rollercoaster - what was last year like, and what to expect from the housing market in 2025?

Magdalena Milert

23 of May '25

Residential rollercoaster

il: Magdalena Milert

...

The housing market is like a meme with Spiderman, with lawmakers, developers and buyers pointing at each other. Will a new relief program be introduced? Will sellers lower their prices? Or will inflation and loan installments change again?

The unknowns are many, as are the predictions. Although some headlines sound ominous, predicting a collapse of the real estate market, these are more clickbait plays by the press. Looking at price charts over several years, we see one thing: continued growth. If we bite into more professional statistics, we don't find sensationalism. Developers are aiming to stabilize housing prices. There are also quite a few voices predicting even a decline in them, but by a maximum of a few percent. The first symptoms of housing price declines have even already been observed - in January this year in four provinces. Compared to December 2024, apartment prices fell in Świętokrzyskie (by 4 percent), Opolskie (by 3.9 percent), Małopolskie (by 1.9 percent) and Warmińsko-Mazurskie (by 0.4 percent). It can be assumed that a further slowdown in housing price growth and rising inflation will lead to an intersection of the two curves.

Housing rollercoaster

il: Magdalena Milert

And what is the situation in individual cities? In 2024, it was Wroclaw that recorded the highest price increase in the primary market - by 12 percent (!) - reaching an average price of about PLN 14,700 per square meter. On the other hand, the smallest increase was recorded by Warsaw, seemingly only 5 percent, but it is still here that we have the highest average price per square meter - 17.7 thousand zlotys[1].

Although the press is eager to write about the fact that last year there were as much as 30 percent more construction starts (compared to 2023 and 2022), 9.6 percent fewer apartments were handed over for use and commissioning than the year before[2]. The gap between the number of building permits and development projects started has also been growing for more than four years[3]. As we can read in the JLL report, in the whole of 2024, the six largest markets sold more than 31 percent fewer units than in the previous year[4]. From media reports we will learn that supply exceeds demand, but it is worth bearing in mind that this is simply the market's reaction to the situation of reduced customer traffic and relatively wide offerings in some markets.

The reasons for the current situation on the market can be seen in the fact that the prices of apartments in the largest Polish cities have grown faster than wages in recent years[5]. In five years, average gross wages have increased by 50-60 percent, while the prices of 50-square-meter apartments have jumped 70 to 140 percent. According to Bankier.pl, in Q3 2024, one had to spend from 57 gross salaries in Lodz to as much as 73 in Warsaw and Krakow to buy such a unit! On a seven-year scale, the largest increase in housing prices was recorded in Lodz (as much as 144 percent). Nevertheless, the situation has slightly improved compared to 2020-2022: for example, in the third quarter of 2020 in Gdansk, 78 salaries were needed for an apartment, in 2024 - 9 less (although still a lot!). High interest rates continue to persist, and the uncertainty surrounding the new housing program is only putting the brakes on the decision to buy one's own M more firmly.

Of course, the reason for rising housing prices can also be found in the prices of building lots. Over the past five years, prices have been on an upward trend, with very significant increases in some areas. In 2024, the average price of a square meter in Poland was about 220-230 zlotys. The most expensive were plots in cities. In the first quarter of 2024, in Wroclaw, Lodz, Krakow, Warsaw and Gdansk, the average price of a plot was more than PLN 600 per square meter, in Warsaw - more than 800 (in central districts such as Mokotow and Wilanow - even 2000). The cheapest of the cities was Lodz, where one had to pay an average of just over 400 zlotys for a square meter of a building plot[6]. It is expected that in 2025 the average increase in the price of building plots may be between 5 and 10 percent, and an additional factor affecting prices will be the change in real estate tax, which came into effect on January 1, 2025[7].

We should add that the majority of land market transactions in large cities last year involved peripheral neighborhoods, Białołęka, Wilanów and Wawer in Warsaw or Psie Pole in Wrocław[8]. Lower land prices are due to its greater supply, but also depend on its distance from transportation infrastructure, size, shape and availability of utilities. The value of a plot increases if it has a building permit. The cheapest land is found in counties surrounding metropolitan areas, the exception being prestigious locations such as Konstancin-Jeziorna or coastal areas.

The average price of total building plots in 2019-2021

il: Magdalena Milert

The secondary housing market itself has also slowed down in 2024. Although the beginning of the year promised endless increases (in Katowice the price increase was 12.5 percent[9]), the subsequent stagnation cooled intentions to sell at a high profit. Figures from the Central Statistical Office show that in Q3, the rate of price increases was the lowest since the beginning of 2023, at only 1.6 percent per quarter[10]. The fourth quarter of 2024 saw a bump, with prices falling 6.3 percent in Gdansk, 3.2 percent in Warsaw, 2.2 percent in Krakow and 0.8 percent in Wroclaw[11]. How did this happen? In the first half of the year, high demand led to price increases, so in the second half the market responded with increased supply, but also with more cautious buyers, and this translated into price stabilization and price declines in some locations. Housing prices are also dependent on monetary policy, so the banks' lending policies and expectations of future decisions by the National Bank of Poland on interest rates were also important here, affecting customers' purchasing capacity and market dynamics. Experts predict that housing prices may stabilize in 2025, and further small declines are possible in some regions[12].

We can also look for signs of change and a certain sense of the new situation from... flippers. They are the ones, hitherto making skyrocketing profits through the rapid purchase and sale of apartments, who are beginning to face difficulties resulting from declining demand[13]. The limited availability of mortgages and the rising cost of renovations have left many hoping for a quick profit stuck with unsold apartments, and in some cases incurring losses[14]. Many people entered the flipping market without sufficient knowledge, hoping to make easy money, which led to excessive speculation and price hikes. The period of quick and guaranteed profits under the title "everything sells anyway" may become a thing of the past. Donatan, a Polish music producer, composer and sound engineer, admitted in an interview: "It's hard, because in the past, about 5 years ago, I used to buy apartments in packages of 10-15 units, because prices were lower per meter. Now, unfortunately, I have to buy 5-6 units, because prices have gone up so much. It's hard for me because of this. Really, I would rather buy more. And now someone will be outraged at this. And this is also a burden."[15]. In the same interview, he also admitted that he doesn't know exactly how many apartments he owns, because "the first 100 are the most gratifying, [...] after that it's hard to keep count."

Sales profitability assessment (net result) of developers (in percent) - source: NBP survey

il: Magdalena Milert

Almost all reports and analyses, however, indicate that despite the "difficult economic situation," the construction industry in Poland has maintained solid financial performance. If anyone was to crumble out of the market, it was individuals, not large companies. These are coping - in 2023 and similarly in 2024 (thanks to positive inflation in the construction industry), the 300 largest construction groups recorded revenues of 152 billion zlotys, accounting for more than 60 percent of the turnover of the sector of medium and large companies[16].

And what about developers' margins? They reached record levels in 2024. The average gross margin exceeded 30 percent, and in some cases even approached 50 percent[17]. An example is Ronson Development, which in the first half of 2024 achieved a gross margin of 48 percent. Other calculations show that developer Archicom achieved a margin of 36.5 percent, but this was significantly lower than in previous periods - for the second quarter of 2023 it was 45.8 percent, and for the same period of 2022 it was 46.4 percent[18]. Atal, on the other hand, achieved a net margin of 19.5 percent, and here, too, the result is better than in previous months: in the second quarter of 2023 it amounted to 15.8 percent, and in the third quarter of the same year - 18.5 percent. Despite the high cost of construction materials and labor, margins remain at a level that allows real estate development companies to achieve attractive financial results.

By comparison, the average gross margin of listed developers in 2019-2023 was 29.5 percent, while the average for Europe is 23.9 percent. Minister of Funds and Regional Policy Katarzyna Pe³czyñska-Na³êcz is calling for the OCC to investigate the margins of real estate development companies in Poland. Developers' margins are the highest ever and more than twice as high as the European average. [...] It's time for the Office of Competition and Consumer Protection to look into this," she said in a video posted on her profile on the X platform[19].

Katarzyna Pe³czyñska-Na³êcz also announced that a bill will be presented to solve the problem of developers hiding housing prices[20]. The Polish Association of Real Estate Developers (PZFD) responded to this proposal with its objections. Although the PZFD supports market transparency, it fears that publishing prices could... discourage potential buyers, who might find the prices inappropriate[21]. Developers believe that not publishing prices allows for an individual presentation of an investment's strengths, and companies that publish prices see this as a competitive advantage. The association criticizes the idea of regulating marketing practices and proposes the creation of a Housing Price Portal, which would publish transaction prices.

Net margins of developers from the WSE and Europe

il: Magdalena Milert

Another pebble in the garden of stability may also be the fact that in recent years there has been a significant increase in Poles' interest in investing in foreign real estate. We are beginning to geographically diversify our wealth. The experience of the pandemic, the hybrid labor model and the situation in Ukraine are prompting many to treat real estate abroad as a permanent place to live, rather than just a vacation location[22]. Many are looking for a "second home" in warmer climates, planning to move, especially in retirement, or looking at such investments as a way to diversify capital and hedge against potential risks in the country[23]. This is evident in statistics and increased online searches for apartments in Spain. Experts point out that it is also possible to take out a loan to buy property abroad, and many countries offer more favorable financing terms than in Poland. In addition, the location of an additional apartment or house in warmer regions is more competitive than in Poland, where the tourist season is limited to summer only (especially in the north of the country).

Spain remains the most popular destination, with Poles buying more than 4,200 apartments in 2024, ranking them fourth among foreign buyers, just after the British, Germans and Moroccans[24]. Of course, high real estate prices in Poland are also prompting investors to seek more attractive deals abroad. For comparison, in 2024, the average price of a square meter of real estate bought by foreigners in Spain and Italy was about 3 thousand euros (about 13 thousand zlotys), while in Warsaw prices reached up to 38 thousand zlotys per square meter[25].

Spain offers relatively affordable real estate prices compared to Poland. Apartment prices range from 450 thousand euros to 1.9 million euros, and houses cost from 1.5 million to 5 million euros[26]. Popular in the Marbella and Costa del Sol area are apartments of 100-300 square meters priced from 450 thousand to 4.5million euros, and detached houses of 250-600 square meters in the price range of 1.5 million to 5 million euros[27]. Among properties bought by Poles in Spain in the first quarter of 2024, 75 percent of transactions were in the primary market. Poles are most likely to choose Catalonia, Valencia, Costa Blanca and Andalusia[28]. At the same time, it was in Spain that protests against high housing prices took place, mainly directed at the regional authorities of the capital[29].

In addition to Spain, Polish capital is also increasingly being invested in Italy, Cyprus, Turkey, Bulgaria, Croatia, Portugal and even in such distant places as Thailand. The average cost of buying real estate in countries such as Greece, Italy and Cyprus is between €200,000 and €250,000, while in Turkey and Thailand it is around €150,000.

Inventories (at the end of 2023) versus sales revenue (for the whole of 2023) of three developers, against the background of three selected companies from other industries - source: own compilation based on the annual reports of the analyzed companies

il: Magdalena Milert

If not abroad, then what? Properties from the premium and luxury segments. They are the ones in 2024 of greatest interest[30]. According to experts, this area of the market is characterized by resilience to economic crises and stability, and buyers see it as a form of capital protection against inflation, a way to multiply it and an element of investment diversification. With such transactions, however, it must be an all-inclusive property, meaning a prestigious location with unique architecture, high quality finishes, and access to amenities such as a swimming pool, gym, concierge services included, of course, or an apartment with a view of the city skyline. All preferably in a renovated townhouse or palace.

Who fared worse in this summary? Well, only 35 percent of working couples in Poland can afford to buy a two-room apartment of 45 square meters on credit[31]. The situation is particularly difficult in the largest cities, such as Krakow, where only about 18 percent of couples can afford such a purchase. The affordability of housing is closely linked to demographic dynamics - in cities losing residents, prices are lower, making real estate more accessible to local buyers. In contrast, one could say that in smaller cities such as Walbrzych, Wloclawek or Tarnobrzeg, about 66 percent of working couples can afford to buy a similar apartment on credit. In these locations, prices per square meter are up to three times lower than in Krakow. Only that the unemployment rate in them in June was, respectively: 4.6, 8.3 and 6.9 percent[32]. This means that only Walbrzych does not exceed the average for Poland, which was 5.4 percent at the beginning of 2025 (at the end of June 2024 it was 4.9 percent)[33].

Housing affordability against population change in 2013-2023 HREIT estimates based on NBP and ZUS data (for Q3 2024)

il: Magdalena Milert

The unsustainability of housing programs due to the lack of a coherent, long-term strategy is one of the fundamental challenges of state policy. Developers are not slowing down and will carry out planned investments. Some form of stable housing policy is necessary, but it should be a framework and cross-party, and not just an element of ad hoc election promises. Compared to recent years, less excitement can be expected in the real estate market. After a period of strong turbulence caused by the pandemic, soaring interest rates, the war in Ukraine and the Credit 2% program, the coming months may bring a gradual calming down and a return to stability. In 2025, neither dynamic price rises nor sharp collapses should be expected. However, more interest in the secondary market can be anticipated, and there may be news of discounts or declines in the value of apartments, but they will probably concern selected segments of the market or financially troubled developers.

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Housing rollercoaster - what was last year like, and what to expect from the housing market in 2025?

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