Poland records EU’s highest house price growth for third consecutive quarter

Poland has recorded the highest annual rise in housing prices in the European Union for the third quarter running, new data from Eurostat show.

Prices rose by 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%.

Six countries saw prices fall, with Luxembourg (-8.3%), Finland (-4.8%) and France (-4.6%) recording the biggest drops.

On a quarterly basis, prices in Poland rose by 2.9%, which was only the 8th highest rise among EU countries but well above the average of 1.9%. The largest quarter-on-quarter increases were seen in Croatia (4.3%), Portugal (3.9%) and Spain (3.6%).

Poland’s figures for the second quarter do show a slowing of house price growth compared to the first quarter both in annual terms (where it was down 0.3 percentage points) and quarterly ones (down 1.4 percentage points).

House price growth was stoked last year in Poland by a popular mortgage subsidy programme for first-time buyers introduced by the previous Law and Justice (PiS) government.

As the scheme was nearing its end in late 2023, Poland saw a record number of mortgage applications in December, while in January mortgage lending exceeded 10 billion zloty (€2.3 billion) for the first time in history as the contracts eligible for the programme were finalised.

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After the subsidy scheme ended, new Prime Minister Donald Tusk, whose coalition replaced PiS in office in December, announced that it would be relaunched in modified form under his government.

There is, however, no agreement on exactly what form it should take within Tusk’s broad ruling coalition. One member in particular, The Left (Lewica), strongly opposes another mortgage subsidy scheme, arguing it will lead to further increases in housing prices. It wants the state to instead increase the supply of low-cost rental housing.

According to the original plans, the programme was meant to start in the fourth quarter of this year. However because the coalition partners have yet to reach an agreement, it is unclear when the programme may come into force.

Around 500 million zloty (€116 million) that had been put aside for the programme this year has instead been reallocated to help victims of the major floods that recently devastated southwest Poland.

Prices for both buying and renting in Poland have soared, leaving many struggling to afford housing.

But solutions proposed by the two main parties – to subsidies mortgages – repeat demand-side solutions that have failed in the past, writes @WojciechKosc https://t.co/I0DUlOEn2h

— Notes from Poland 🇵🇱 (@notesfrompoland) March 31, 2023

Housing Prices have also been pushed up by a housing shortage in Poland, with some estimates pointing to a shortfall of as many as 4 million units.

That has made entering the market difficult for young Poles, over 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 invasion of the country in 2022 has also put pressure on Poland’s housing market., though recent research indicates that this had a smaller effect than widely believed.

Many have blamed a surge in rental prices in Poland since 2022 on the mass arrival of Ukrainian refugees.

However, @AdamCzerniak’s research shows that the impact of wartime migration on the Polish rental market is much smaller than commonly thought https://t.co/nwBLCawJNK

— Notes from Poland 🇵🇱 (@notesfrompoland) September 16, 2024

Main image credit: Sylwia Bartyzel/Unsplash