Poland recorded the highest annual increase in house prices in the European Union for the third consecutive quarter, new data from Eurostat shows.
Prices rose 17.7% year-on-year in Poland in the second quarter of this year, ahead of Bulgaria (15.1%) and Lithuania (10.4%) and well above the EU-wide figure of 2.9% .
Prices fell in six countries, with Luxembourg (-8.3%), Finland (-4.8%) and France (-4.6%) recording the biggest declines.
On a quarterly basis, prices in Poland rose by 2.9%, which was only the eighth-highest increase among EU countries, but well above the average of 1.9%. The largest quarterly increases were recorded in Croatia (4.3%), Portugal (3.9%) and Spain (3.6%).
Poland’s figures for the second quarter do show a slowdown in house price growth compared to the first quarter both in annual terms (where it fell by 0.3 percentage points) and in quarterly terms (down by 1.4 percentage points).
House price growth was boosted in Poland last year by a popular mortgage subsidy program for first-time buyers introduced by the previous Law and Justice (PiS) government.
As the scheme nears its end at the end of 2023, Poland saw a record number of mortgage applications in December, while in January mortgage loans exceeded 10 billion zlotys (€2.3 billion) for the first time in history, as contracts eligible for the program were completed.
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After the end of the subsidy scheme, new Prime Minister Donald Tusk, whose coalition replaced PiS in office in December, announced that it would be relaunched in a modified form under his government.
However, there is no agreement within Tusk’s broad governing coalition on the exact form it should take. One member in particular, the Left (Lewica), is staunchly opposed to another mortgage subsidy scheme, arguing that it will further drive up house prices. He wants the state to increase the supply of low-cost rental housing instead.
According to original plans, the program was supposed to start in the fourth quarter of this year. However, as the coalition partners have yet to reach an agreement, it is unclear when the program might come into effect.
About 500 million zlotys (116 million euros) that had been earmarked for the program this year were instead reallocated to help victims of the major floods that recently devastated southwestern Poland.
Prices for both buying and renting in Poland have risen, leaving many struggling to afford a home.
But the solutions proposed by the two main parties – to subsidize mortgage loans – repeat demand-side solutions that have failed in the past, he writes @WojciechKosc https://t.co/I0DUlOEn2h
— Notes from Poland 🇵🇱 (@notesfrompoland) March 31, 2023
House prices have also been pushed up by Poland’s housing shortage, with some estimates pointing to a shortfall of up to 4 million units.
This has made it difficult for young Poles to enter the market, more than half of whom, according to Eurostat, live with their parents, one of the highest figures in the EU.
A large influx of refugees from Ukraine following Russia’s 2022 invasion has also put pressure on Poland’s housing market, although recent research indicates that this has had less of an effect than widely believed.
Many have blamed an increase in rental prices in Poland from 2022 on the mass arrival of Ukrainian refugees.
However, @AdamCzerniakhis research shows that the impact of wartime migration on Poland’s rental market is much smaller than commonly believed https://t.co/nwBLCawJNK
— Notes from Poland 🇵🇱 (@notesfrompoland) September 16, 2024
Main image credit: Sylwia Bartyzel/Unsplash
Alicja Ptak is Notes senior editor in Poland and a multimedia journalist. She previously worked for Reuters.
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