The Warsaw market has been growing very fast for the last three years. Last year may be considered very successful in terms of the number of flats delivered to the market. Already in November it exceeded the 2006 total figure (14,000). Prices stabilized at a level rather unattractive for speculative investors, hence a cut back on such kind of investments. The growing interest rate (by 100 basis points) also influenced the demand slowdown.
More restrictive credit policy, introduction of the S recommendation as well as the credit crunch and its implications for the national economy impacted investors who have finally postponed their buying decisions. Moreover, clients were able to see price decrease in districts such as Wawer, where the price dropped to EUR 1,280/sqm (PLN 4,600) thus they expected further reductions. This caused a slowdown in sales on the residential market within the last few months.
Some of the developers responded to this new situation by offering incentives such as more advantageous payments schedule, abstraction of VAT cost from the overall price, etc.
Others (the minority) decided to postpone the commencement of sale expecting the market to show signs of improvement soon.
For an average monthly wage in December 2007, 0.47 sq m of an average flat could be bought in Warsaw last year. For comparison, in Madrid it was 0.45 sq m at the same time.
In Q4 2007 the unchallenged leader in terms of a number of flats sold in Warsaw was the Polish J.W.Construction. Other active developers were Dom Development, Budimex Nieruchomosci, Atlas Estates and the French Bouygues Immobilier. The overall share of these investors in the market reached over 35%.
The most expensive - EUR 11,222/sq m (PLN 40,500) and the most exclusive apartments were offered by Orco Property Group in the City Centre (Zlota 44, Mokotowska 59). Developer House by contrast proposed the lowest prices in Wawer - EUR 1,280/sq m (PLN 4,600).
