2020 on the housing market in Warsaw

Year 2020 was a time of significant changes for the residential real estate market. However, high uncertainty felt by both developers and buyers did not translate into radical drops in sales throughout this time, and companies operating on the largest markets did unexpectedly well.

Warsaw has the largest scale of turnover on the residential market in Poland, and the volumes of transactions on the primary market achieved at the peak of the 2017-2018 boom equalled those of London and were 4 times higher than, for example, Bucharest or other capitals in the Central and Eastern European region.

In 2020 in Warsaw, developers sold over 19,000 units. Such high numbers at the time of the pandemic were mainly due to excellent sales in the 1st quarter of last year, in which 36% of total annual sales were achieved, as well as satisfactory sales volumes in the 3rd and 4th quarter. And although returning to the 2015 sales levels may seem like a weak result in the context of recent record years, it should be emphasised that in 2020 the offer available on the Warsaw market sold out faster than in any other major city in the country.

With a limited supply of new projects, which offered only 15,000 new units for sale last year, the offer in Warsaw at the end of the year dropped to mere 13,800 units, which is 30% less, compared to the boom period.

There are districts where there is simply no room for new investments or where land prices are too high to carry out housing projects. In such districts as Żoliborz, Ochota, Śródmieście or Bielany, there were only anywhere from dozens to several hundred units available for buyers to choose from.

Białołęka and Mokotów still have the biggest offers of units for sale. At the end of the fourth quarter, both districts had over 2,000 units on offer, although at this point they had swapped the positions they held at the end of 2019.

We also observed significant reductions in new investments in Praga Południe and in Wola. In Praga, there were about 1,700 units launched for sale, which is half the number from 2019. In Wola, a district which during the housing boom offered many new plots for housing development,  only slightly over 1,100 units  were offered in 2020. Ursus came last in the fifth place among districts offering over 1,000 units at the end of 2020.

Not surprisingly, sales were highest in the districts with the biggest offers. Sales in Białołęka, Mokotów, Praga Południe and Wola amounted to a total of nearly 9,800 units, which accounted for over half of all units sold in 2020 in Warsaw. Ursus also recorded good numbers with the second largest transaction volume in the history of sales in this district. 

Since the beginning of 2017, the average asking prices on the Warsaw market increased by approximately 2-3% quarter to quarter. At that time, you had to pay an average of PLN 7,900/sqm. With each subsequent year, this price increased by about PLN 1,000, until the beginning of 2020, when it reached almost PLN 11,000/sqm. Despite expectations, asking prices did not drop during the pandemic year 2020.

At the end of December, in 10 out of 18 districts, the average price of units on offer exceeded PLN 10,000/sqm. The most expensive districts included Śródmieście, Ochota, Wola, Praga Północ, Bielany and Żoliborz. In these districts, high prices were the result of a limited supply, on one hand, and on the other, the nature of the product offered, with a predominance of unique projects, often in the upper-middle segment or apartments. In the case of Wola, where the offer is relatively bigger, the dominant projects are ones located closer to the business hub around Rondo Daszyńskiego. Another important aspect influencing prices - in all of Warsaw - is also the proximity of the second metro line – either already existing, as in Wola or Praga Północ, or planned - as in Bemowo.

The choice remains very limited. Only peripheral districts such as Wawer, Rembertów and Wesoła offer units at prices between PLN 7,000-8,000/sqm. In the last quarter of last year, even Białołęka reached the price level of units on offer at PLN 8,000/sqm. Although in this district, as well as in Mokotów, which offers a large selection, we should remember the diversity of the offer, incl. due to the large area of ​​the district and the nature of selected micro-locations.

Since the dynamic increase in prices - the average price of units on offer for the whole of Warsaw has increased by an average of 40%.

Warsaw is currently a market where developers have a bigger problem supplementing the shrinking offer than finding buyers for the units on offer. Especially since, despite the pandemic, institutional investors have sustained their interest in purchasing entire buildings for long-term lease and are increasingly active in this field. On the other hand, individual investors remain active, who, due to lack of alternatives, try to secure their savings on a seemingly stable and predictable housing market. Is it enough to keep sales at last year's levels in 2021? It seems highly probable.