Mortgages are cheaper, Property prices will continue to rise
Monthly mortgage repayments have never been lower as the Polish economy enters 2021 with a 35 year mortgage of 500,000 zl. costing less than 2,000 zl. per month.
Each country within the EU reacted differently to Covid-19 in March and the low infection rates in the first wave allowed Poland the time to both prepare for and ignore a second wave in Autumn.
We wrote in the past that at that time it was impossible to forecast effectively in the absence of data but as we come to the end of 2021, the Polish economy looks to have weathered the various lockdowns surprisingly well.
Demand for warehousing is up while footfall is down in commercial, as would be expected, but the demand for residential property continues apace.
Initially, banks were reluctant to lend in the early months of the pandemic due to a real fear of asset price collapse but with lower rates and a stable market, normal lending seems to have been restored.
The following chart details the hit (and recovery) to private consumption spending during the year and Poland was least affected as compared to other EU countries.
The future of the Polish economy will depend very much on the effectiveness of the vaccine distribution and future lockdowns may lie ahead. However, It is unlikely that the government will change its approach to date of trying to balance health and economy.
As in most countries, young home buyers will have spent the last 9 months saving for their house deposits and despite the boom in online sales the level of savings will be high.
Our only real concern will be the continuing increase in inflation which may prompt the Central Bank to increase interest rates earlier than other countries. We do not in any way discount the enormous harm that this pandemic has and will continue to visit on large parts of the Polish economy. However, we are comfortable in our forecast that residential prices will continue to rise in 2021.