Statistics Poland (Główny Urząd Statystyczny, GUS) has released data on flat prices for the second quarter of 2024. Compared to the same period in 2023, prices have risen by 17.7%. Since 2015, the average cost of flats has surged by 105.9%. Nine years ago, the price of a single property would have been enough to purchase two flats at today's rates.

Some argue that the sharp rise in property prices can be explained by the nearly twofold increase in average wages over the same period. However, starting this year, Statistics Poland began reporting the median salary, which provides a more accurate reflection of salary distribution than the average, adding up all salaries and dividing by the number of employees.

The median salary represents the midpoint of all salaries, meaning that half of all employees in Poland earn less than this figure, while the other half earn more. According to GUS, the median gross salary in April 2024 was PLN 6,500. This reveals that 70% of people in Poland earn less than the national average, which stood at PLN 8,300 in April. Comparing average salaries with rising property prices is misleading, as most Poles do not earn the average salary.

We recently reported that the size of the flat one can afford with a loan based on the national average salary has decreased from 44 square metres in 2021 to just 27 square metres in 2024. Only 30% of Poles earn the national average or more. Additionally, housing loans in Poland are currently the most expensive in Europe, driven by a combination of high interest rates and banks' discretionary setting of the WIBOR rate. On top of that, real estate developers are applying the highest profit margins. As a result, fewer people can afford to buy flats at current prices, leading to a slowdown in sales.

Why are real estate developers and banks reluctant to lower prices despite declining property sales? They are banking on the government to introduce credit subsidies to bridge the gap between high property prices and the limited financial capacity of Poles using public funds. The Ministry of Development and Technology continues to support the idea of a zero-interest mortgage loan, even though economists warn it will only drive up property prices further. Growing public awareness and dissatisfaction with this policy have led the government to delay the plan until 2025.

In the coming months, it remains to be seen whether banks and developers will adjust property prices to match the financial capabilities of Polish buyers or if they will accept lower sales until a decision on zero-interest loans is made. Both sectors have enjoyed record profits in recent years, allowing them to take such measures without immediate financial strain.

Source: obserwatorgospodarczy.pl, bankier.pl, rp.pl