Poland

Poland's Residential Property Market Analysis 2024

Lalaine C. Delmendo

Surprisingly, Poland's house prices are rising strongly by double-digit figures, despite weakening demand and supply.

Table of Contents

Housing Market Snapshot

In the second quarter of 2024, the average price of existing flats in Poland's 7 big cities (Warsaw, Gdańsk, Gdynia, Kraków, Łódź, Poznań, and Wrocław) soared by 17.7% y-o-y to PLN 12,709 (€2,900) per square meter (sq. m), according to the Polish central bank, Norodowy Bank Polski (NBP). When adjusted for inflation, prices were still up by a huge 14.71% over the same period.

This was a sharp acceleration from the modest year-on-year price growth of 2.95% seen in the same period last year. In fact, it was the biggest annual increase recorded since Q4 2007.

Quarter-on-quarter, prices of existing flats in the country's 7 big cities rose by 3.8% (2.3% inflation-adjusted) in Q2 2024.

"In the last three quarters of 2024, the average price of apartments sold by developers has increased and is now approaching the asking prices of units on offer. Wealthier buyers who are accepting higher prices are more active" said JLL in its Q3 2024 report.

Poland's apartment price annual change

In Poland's major cities:

  • In Warsaw, the average transaction price of existing flats rose strongly by 14.52% in Q2 2024 from a year earlier (11.61% inflation-adjusted). It was an acceleration from y-o-y price increases of 12.95% in Q1 2024, 8.92% in Q4 2023, 6.56% in Q3 2023, 3.86% in Q2 2023, and 6.68% in Q1 2023. It was also the biggest annual growth since Q1 2008. Quarter-on-quarter, prices were up by 2.44% (0.99% inflation-adjusted) in Q2 2024.
  • Kraków experienced the biggest year-on-year price growth among the 7 big cities, at a whopping 30.36% (27.06% inflation-adjusted) during the year to Q2 2024, more than seven times the prior year's modest increase of 4.12%. In Q2 2024, prices rose by 6.73% (5.21% inflation-adjusted) from the previous quarter.
  • Other Polish major cities also registered strong house price increases in Q2 2024 from the previous year, including Wrocław, with a house price growth of 21.36% (18.28% inflation-adjusted); Łódź, with house price growth of 19.42% (16.4% inflation-adjusted); Poznań, with a house price increase of 17.58% (14.6% inflation-adjusted); Gdynia, with house price growth of 15.09% (12.17% inflation-adjusted); and Gdańsk, with house price increase of 10.77% (7.96% inflation-adjusted).

Warsaw has Poland's most expensive housing, with an average transaction price for existing flats of PLN 15,123 (€3,451) per sq. m in Q2 2024, according to NBP. Housing is also expensive in Kraków, with an average price of PLN 14,585 (€3,329) per sqm, in Wrocław with PLN 12,420 (€2,834) per sq.m., and in Gdańsk with PLN 12,243 (€2,794) per sq. m.

Other major cities include Gdynia with an average house price of PLN 11,524 (€2,630) per sq. m, and Poznań with PLN 10,471 (€2,390) per sq. m.

Łódź has the cheapest houses among the 7 big cities, with an average price of PLN 7,602 (€1,735) per sq. m in Q2 2024.

Demand seems weakening. In Q3 2024, only Kraków saw a slightly quarterly increase in the number of flats sold, based on JLL figures. Warsaw saw zero growth in sales over the same period. Wrocław and Tri-City registered quarterly sales fall of 6% and 10%, respectively. The largest declines in sales were recorded in Poznań and Łódź of between 22% and 25% q-o-q in Q3 2024.

Overall, the number of flats sold in Poland's six largest markets totaled 9,200 units in Q3 2024, down by 6.9% from the previous quarter.

Prior to this, the total number of residential units sold in Poland's six major cities - Warsaw, Tri-City, Kraków, Poznań, Wrocław, and Łódź - rose strongly by 65% y-o-y to around 57,500 units in 2023. All of the country's largest markets saw a marked year-on-year increase in sales transactions last year.

Amidst cooling demand, supply is also declining. The total number of houses launched in the market in six major cities in the third quarter of 2024 was just about 12,600 units.

"Compared to the second quarter, the number of flats introduced to the market decreased the most in Łódź, Poznań and the Tri-City with declines of between 36% and 39%," said the JLL report.

Yet Poland remains one of the countries that is now seeing the highest interest from the Global Property Guide's readers in Europe. Foreigners who are citizens or entrepreneurs from EEA countries (EU + Norway, Lichtenstein, Iceland) and Switzerland are free to buy any type of real estate. Foreigners from other countries may freely purchase condominium units throughout Poland, with the exception of areas located in the border zone.

Poland experienced a sharp economic slowdown in 2023, registering a real GDP growth rate of just 0.3% during 2023, following strong expansions of 5.6% in 2022 and 6.9% in 2021, mainly due to a decline in private consumption. This was even lower as compared to the average growth for the EU-27 of 0.6%. In fact, with the exception of the pandemic-induced contraction in 2020, the economic growth of Poland last year was the slowest since the early 1990s when the country was dealing with shocks from the transition to a free-market economy.

The Polish economy is expected to gradually improve this year, with the European Commission projecting a modest real GDP growth rate of 2.8%. The International Monetary Fund's forecast is slightly more optimistic, expecting the Polish economy to grow by 3% for the full year of 2024.

During 2023, the country's GDP per capita climbed to US$22,086, up by a huge 18.1% from the prior year, based on IMF figures. In fact, the GDP per capita almost quadrupled in the past two decades.

Poland GDP Per Capita graph

Demand Highlights

Poland's big property booms

Poland had one of Europe's biggest housing booms pre-2008 global crisis, because of rapid economic growth, and has suffered less than others since.

Property prices surged in Warsaw during the boom - rising by 23% in 2005, 28% in 2006, an amazing 45% in 2007, and 13% in 2008, according to REAS. Other cities such as Wroclaw saw even larger house price rises.

However, during the 2008-09 crisis, the Polish zloty fell dramatically, and many mortgages - which were mainly denominated in foreign currencies - became unrepayable. The zloty lost more than 30% of its value against the euro in just seven months - from an average monthly exchange rate of PLN 3.2518 = €1 in July 2008 to PLN 4.6515 = €1 in February 2009.

Poland Monthly Average Exchange Rate graph

Home prices then fell for 6 straight years. House prices in Poland's 7 major cities dropped 13.8% (-25.3% inflation-adjusted) from 2008 to 2013.

Prices started to rise again in 2014, and have been rising since then. House prices surged by nearly 9% annually from 2017 to 2022. In 2023, house price growth moderated to 5.5% and fell slightly by 0.7% when adjusted for inflation.

Due to the continuous price increase in the past several years, the average price of existing flats in Poland's 7 big cities was more than 84% higher in the first half of 2024 as compared to the previous peak, seen in 2008.

By major city, from 2008-peak to H1 2024:

  • Krakow registered a speculator growth in house prices of 123.4% from 2008 to H1 2024.
  • In Wrocław, house prices are up by a whopping 111.7% over the same period.
  • In Gdańsk, house prices are now up by a huge 102.4% in H1 2024 from its 2008 peak.
  • In Poznań, house prices are up by 92.8%.
  • In Łódź, house prices are up by 89.1%.
  • In Gdynia, house prices are up by 85.6%.
  • In Warsaw, house prices are up by 67.2%

Poland Residential Property Prices graph

Demand is weakening

Residential property sales in Poland's major cities remain weak. In Warsaw, the number of flats sold was also unchanged in Q3 2024 as compared to the previous quarter, at about 3,000 units, based on JLL figures. On the other hand, Kraków saw a slight quarterly increase in sales, at 1,400 units.

In Wrocław, the number of flats sold fell by 6% q-o-q to 1,500 units in Q3 2024. Likewise, Tri-City also registered a sales decline of almost 10% q-o-q to 1,500 units over the same period.

The largest declines in sales were recorded in Poznań and Łódź of between 22% and 25% q-o-q in Q3 2024.

"According to our forecast, the sale of new apartments in the largest markets in the third quarter turned out to be on the weak side," said JLL in its Q3 2024 report. "In most cities, the results were lower than in the second quarter, and in the two cities that did relatively well, namely Krakow and Warsaw, sales were still at a low level for these markets. In total, in the six largest markets, developers sold around 9,200 flats in Q3 (-6.9% q/q)."

The market situation was especially challenging for sellers in Poznań and Łódź. At the sales rate observed in the third quarter, it would take two years to sell the current inventory in these two markets.

Prior to this, the total number of residential units sold in Poland's six major cities - Warsaw, Tri-City, Kraków, Poznań, Wrocław, and Łódź - rose strongly by 65% y-o-y to around 57,500 units, according to JLL's Q4 2023 report.

Accordingly, most cities also experienced a slowdown in the number of flats listed for sale. Overall, the new supply across the six major markets reached 12,600 units in Q3 2024.

DEMAND & SUPPLY, Q3 2024
Major cities No. of units sold No. of units launched for sale Total no. of units offered for sale Average price of unit on offer (PLN/sqm)
Warsaw 3,000 4,000 13,400 18,200
Tri-City 1,500 1,400 6,800 16,400
Kraków 1,400 2,500 7,900 16,800
Poznań 900 1,100 7,400 13,200
Wrocław 1,500 2,700 8,700 14,900
Łódź 900 900 800 11,500
Total 9,200 12,600 45,000 -
Source: JLL

Supply Highlights

Residential construction activity indicators showed mixed results

Indicators for residential construction activity in Poland are mixed, with dwelling permits and starts now rising but completions continue to fall.

During the year to end-Q3 2024:

  • Dwelling permits rose strongly by 25.9% y-o-y to 219,421 units, following annual declines of 18.9% in 2023 and 12.6% in 2022, and increases of 23.6% in 2021, 2.8% in 2020, and 4.4% in 2019, according to the Central Statistical Office of Poland.
  • Dwelling starts soared by 30.7% to 181,486 units in the first nine months of 2024 from the same period last year, following annual contractions of 5.6% in 2023 and 27.8% in 2022 and a growth of 23.9% in 2021.
  • Dwelling completions fell by 9.6% y-o-y to 145,411 units in Jan-Sep 2024, following a decline of 7.2% in 2023 and annual growth of 1.6% in 2022, 6.3% in 2021, 6.5% in 2020, and 12.1% in 2019.

Poland Residential Construction graph

Housing stock continues to increase

There were around 15.78 million dwellings in Poland by the beginning of 2024, up by 1.3% from the previous year and by about 13% from a decade ago. The total useful floor area of dwellings recently reached 1.19 million square meters.

About 67.8% of the housing stock was built in the cities and urban areas while the remaining 32.2% was located in the rural areas.

Poland has traditionally had the highest proportion of privately built dwellings. Developers typically build more than 60% of newly-completed dwellings annually, and private investors, less than 40%. But Poland's housing stock is of low quality compared to the Western European average, according to Ernst & Young. Of the 15.78 million residential units in Poland, more than 60% were built before 1989, mostly during the communist era using prefabricated technology, which tends to be of very poor quality.

Modern units built from 2000 onwards comprise only less than 20% of the total and are concentrated primarily in six areas: Warsaw, Krakow, Poznan, Wroclaw, Tricity, and Lodz.

Poland's housing supply constraint is "mainly administration-driven and consists of the limited number of zoning plans, covering below 30% of the country's area", according to Ernst & Young. The lack of zoning plans causes administrative procedures to take from a few months to a year to resolve.

Rental Market

Moderately good rental yields; large rental market

Gross rental yields in Poland are moderately good, at an average of 6.03% in Q3 2024, up from 5.75% in Q1 2024, based on research conducted by the Global Property Guide.

The Warsaw district of Mokotow, located just below Srodmiescie, houses many foreign embassies and companies. Two-bedroom apartments in Mokotow are rented for about €1,400 per month, earning an average rental yield of 6.16% in Q3 2024.

In the other popular Warsaw neighborhoods, such as Białołęka, Praga Południe, Wola, Bemowo, Downtown, Ursynow, and Bielany, apartments offer good rental returns ranging from 4.46% to 6.55%.

In other major cities:

  • In Wrocław, gross rental yields for apartments range from 4.73% to 6.31%, with a city average of 5.73%.
  • In Kraków, rental yields range between 3.87% and 7.87%, with a city average of 5.97%.
  • In Gdańsk, rental yields range between 4.16% and 6.67%, with a city average of 6.27%.
  • In Łódź, rental yields for apartments range from 5.24% to 6.24%, with a city average of 5.86%.
  • In Lublin, apartments offer yields from 5.49% to 6.27%, with a city average of 5.92%.
  • In Poznań, apartments offer rental yields from 4.94% to 5.88%, with an average of 5.36%.

Renting is an unavoidable choice for more and more Poles, as stricter requirements for mortgage financing, uncertainty in the labor market, and low growth prospects, all discourage households from incurring long-term debt. The movement of people from other cities to the capital, especially students or young people looking for work, also drives people to rent.

About 21% of households in Warsaw rent apartments, with half of these in social and communal housing. Most residential properties in Poland are owned by private individuals.

About 10.7% of the dwelling stock is rented at lower rates, with 5.7% in communal or social housing, 2.1% in cooperative tenancy, 1.2% in state-owned companies, 1.2% in the State Treasury, and 0.5% in public building societies. The remaining dwelling stock is primarily owner-occupied.

Mortgage Market

Mortgage interest rates gradually falling, as the central bank keeps its key rates unchanged

In October 2024, Narodowy Bank Polski (NBP), Poland's central bank, kept its benchmark reference rate unchanged at 5.75% for the eleventh consecutive meeting, as the NBP took a cautious approach amidst an uncertain inflation trajectory. This followed rate cuts of 75 basis points in October 2023 and another 25 basis points in November 2023.

Before the recent shift in monetary policy, the central bank raised the key rate by a cumulative 665 basis points from a record low of 0.1% in September 2021 to 6.75% in October 2022, to rein in inflationary pressures.

During the latest policy decision, the Lombard rate was also kept steady at 6.25%, the deposit rate at 5.25%, the rediscount rate at 5.80%, and the discount rate at 5.85%.

"The Council decided to keep the NBP interest rates unchanged. The Council judges that the current level of the NBP interest rates is conducive to meeting the NBP inflation target in the medium term," said the central bank in its October 2024 Monetary Policy press release. "NBP will continue to take all necessary actions in order to ensure macroeconomic and financial stability, including above all to bring inflation down sustainably to the NBP inflation target in the medium term. NBP may intervene in the foreign exchange market."

In September 2024, the average interest rate for PLN-denominated outstanding housing loans stood at 7.16%, down from 7.4% a year earlier but still far higher than the 3.42% seen two years ago, according to figures from the NBP. Over the same period:

  • Maturity between 1 year and 5 years: the average interest rate was 7.51% in September 2024, down from 7.9% a year ago and 7.6% in the past two years.
  • Maturity of over 5 years: the interest rate was 7.16% in September 2024, slightly down from 7.4% in September 2023 but still far higher than the 3.41% in September 2022.