The secondary-market flat sales crisis continues in Katowice

According to the NBP's quarterly reports, 2015 is the 4th year in a row in which the number of secondary-market flat transactions in Katowice has fallen. While in the second quarter of 2011 the Katowice City Hall recorded over 450 sale agreements, in the third quarter of 2015 that number fell to around 250. According to analyses, the downward trend may well continue. The "Mieszkanie dla Młodych" (Flat for the Young) programme, which has also covered the secondary market since September, may prove to be a lifeline.

The continuing fall in secondary-market flat sales reflects several overlapping factors, including: the financial crisis, which caused the real estate bubble to burst, and a drastic fall in the number of transactions on the housing market, especially in 2012-2013. A consequence of the financial crisis was the tightening of mortgage lending conditions and a recommendation of the Polish Financial Supervision Authority introducing a down payment requirement of 5% from January 2014, rising with each successive year up to the announced 20% in 2017.

Why is there a crisis on the secondary property market?

It is worth noting that the turn of 2012 and 2013 was also the last period of the government programme "Rodzina na Swoim" (Family on Their Own), thanks to which it was possible to buy a flat on the secondary market on preferential terms. In 2012 alone, 395 flats were bought on the secondary market in Katowice under the programme. The next government programme, "Mieszkanie dla Młodych", introduced from 2014, supported only the primary market, plunging the secondary market into crisis.

The primary market versus the secondary market

2014 and the first three quarters of 2015 were a boom period for the primary market – in that time alone, 2,048 flats were put up for sale or rent in Katowice*. Compared with 2012-2013, when that number was as much as 57% lower, at only 886, it is clear how suddenly the supply of flats on the market grew and how its structure changed.

"Few people realise that, with the dynamic development of the primary market, the sellers themselves have a big influence on the fall in secondary-market flat sales. An overly high valuation of the property, unattractive listings, failure to prepare the flat properly for sale – these are only some of the mistakes sellers make. All this, set against the extensive, attractive and widely promoted range of flats from developers, causes problems with selling a secondary-market flat. Despite higher prices, clients choose new flats." – says Marta Kulawik, owner of the REMAX Gold estate agency in Katowice.

Further confirmation of the problems on the secondary market for flats in Katowice is the average time it takes to sell a flat, which, according to NBP data, ranges from about 90 to 150 days depending on the quarter, with an upward trend.

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Forecasts

It is forecast that the fourth quarter of 2015 may mark the beginning of a change in the trend and of greater client interest in secondary-market flats. One of the drivers of the change is the inclusion of this market segment in the "Mieszkanie dla Młodych" programme from September. "Since September we have observed a change in the trend and increased interest from clients in secondary-market flats in Silesia, although most of them make their purchase conditional on whether the flat qualifies for preferential subsidies." – adds Marta Kulawik.

In the near future, secondary-market flats in Katowice should become more popular, not only because of the MdM programme, but also because of stricter rules on granting mortgages. An important factor driving change may be an improvement in the quality of secondary-market properties and of professional estate agency services, in which Poland unfortunately remains far behind Western countries.