Prime value in second-hand homes
A scarcity of new flats and decreasing purchasing power have made home buyers less demanding and a growing number are now looking for shelter on the second-hand market.
According to a recent survey by Reas Konsulting and SMG/KRC Millward Brown, in 2003, 54 percent of potential home buyers was seeking flats in buildings not higher than three storeys. This year the percentage dropped to 35. Also, the most preferred size of flats shrank in comparison to 2003. While a few years ago it was the layout of the flat that was the most important criterion for the average buyer, now price is the main issue.
"Today an average Varsovian can only buy 72 percent of one sqm for his monthly salary. The clients' expectations concerning standards are decreasing and so is the quality of the product," says Paweł Sztejter from Reas Konsulting.
Many in the market for a new home must wait for at least a year for a new flat to be completed. "Sometimes there is no choice as there are no new flats," says Sztejter. In the late 1990s, when new flat prices were not as exorbitant as today and the quality of the second-hand market, which then consisted mostly of blocks of flats built in the 1970s, could not be compared to modern apartments, Varsovians only wanted new flats. Now the primary market has to compete with the secondary market, which today offers flats built in the 1990s following modern standards. "The two markets are now adjusting to and fueling each other," says Artur Pietraszewski, a partner at Reas Konsulting.
The market is being driven by young educated singles who, tired of living with parents or renting flats, cannot wait to have their own home. "We see the results of the 1980-85 baby boom coming to the market. Seventeen percent of Warsaw citizens falls within the 25-29 age group. This is almost 300,000 people who are potential customers of the developers," says Sztejter. The average statistical age of a home buyer is now 31. Every second home buyer is single and 79 percent of the developers' clients have no children. Only 14 percent of them buys a flat thinking about starting a family.
Apart from the average buyers, investment clients are also having a significant impact on demand. "This is a new phenomenon. There are investments where 40 percent of flats is bought for investment purposes. Sometimes people buy single flats for investment," says the president of Reas Konsulting, Kazimierz Kirejczyk. What he fears is that Poland will repeat the bad experiences of Croatia, where young people cannot afford to buy flats on the coast, which is the only place they can find work.
