Warsaw, 5 August 2021
In 2020, the number of new flats brought into use exceeded 220,000, thus reaching a new record. According to the tenth edition of “Property Index Overview of European Residential Markets”, last year the average price of one square metre of residential space in Poland reached EUR 1,581, while in Warsaw it exceeded EUR 2,233. Austria is the most expensive market with the average square metre price of EUR 4,457. Prices of residential space increased in every European capital city except for Rome. The growing demand shall result in further price increase in the nearest future.
Deloitte report summarises the status of the residential estate market in 23 European countries and in Israel in 2020. Experts point out that the economic slowdown caused by the pandemic did not affect the residential market in the same manner as the financial crisis of 2007-2009. Despite economic uncertainty prices of flats increased in all analysed countries.
- says Dominik Stojek, partner associate, Deloitte Real Estate Advisory.
Ranked by the number of new flats brought into use in 2020, Poland comes third, after France (381,000) and Germany (306,000). Bosnia and Herzegovina close the stake with the number of 2,400. At the same time, the ratio of new flats per 1,000 inhabitants is the highest and reaches 5.79. Further, Poland is among the countries with the highest ratio of flats the construction of which commenced in 2020 per 1,000 inhabitants (5.85). In this ranking, Austria comes first with the ratio of 10.85, followed by Romania with 7.52. Developers keep warning, though, that the trend may not last too long. Limited access to construction plots and long administrative procedures may reduce demand in future.
In Austria, the price per square meter of residential space is the highest (EUR 4,457). France comes second (EUR 4,421 per sqm), followed by Germany (EUR 4,100 per sqm). Bulgaria has the lowest prices (EUR 587 per sqm), followed by Bosnia and Herzegovina (EUR 881 per sqm).
Paris remains the most expensive place as far as the residential space is concerned: in 2020, its primary market’s average prices exceeded EUR 12,900 per square meter. Tel Aviv is another city where the prices of residential space exceed EUR 10,000 per square metre.
- says Maciej Krasoń, Real Estate and Construction Sector Leader, Deloitte CE.
In Warsaw and in key regional cities, on average, the transaction prices on the primary market increased by 7.5 percent year-on-year, and on the secondary market, by 11.2 percent.
Lisbon, with the average price per square metre 3.5 times higher than the national average, came first in terms of the denoted difference. In Warsaw this ratio reached 1.4.
Deloitte analysed how long Europeans must work to buy a flat. In this respect, Serbia is the least friendly country, taking the lead the first time ever in history, with the average of 15.2 gross annual salaries needed to buy 70 sqm of residential space. Poles need 7.6 annual salaries for this purpose, which places us in the middle of the stake. Ireland has the most advantageous ratio: just 3.1 annual salaries are enough to buy a flat there.
The mortgage loan to GDP ratio is also important. Access to loans depends directly on residential space prices.
- says Maciej Krasoń.
Interest on housing loans is the lowest in Portugal (approx. 1%), in Poland reaching 2.5% and the highest, 5.3%, in Romania.
The pandemic has adversely affected flat rent prices. After years of stable increase, average prices dropped considerably in all analysed Polish cities due to reduced demand and growing competition among owners. Expressed in EUR, the drops ranged from six percent in Warsaw to 17 percent in Kraków. Even following the decrease, rental prices in Warsaw with the monthly average of EUR 15.1 per square metre were the highest among Central European cities, compared to EUR 11.5 in Prague and EUR 10.7 in Bratislava.
Paris remains the most expensive city in terms of rent, with the average monthly rate of EUR 28.6 per square metre of residential space. At the same time, rent rates plummeted in places previously experiencing high tourist traffic, such as Barcelona, Budapest, Madrid, Prague and Amsterdam as a result of growth in the number of flats offered on the market, formerly rented on a short-term basis.
- adds Dominik Stojek.