The fate of new residential projects depends on access to bank financing, according to Dom Development's Jarosław Szanajca Courtesy of Dom Development

Adam Zdrodowski: Demand for housing has clearly been on the rise in recent months. Is this the beginning of a longer-term trend?

Jarosław Szanajca: I think so. In 2009, our company sold over 800 apartments and most of the sales came in the closing months of the year. This year we expect the figure to exceed 1,000. This is why we have decided to launch new projects and in 2010 we will be able to start construction on another 2,000 units should the market situation continue to improve.

Those projects will mainly be located in Warsaw’s Białołęka and Praga Południe districts, but we are also preparing new developments now and looking for new plots in other parts of the capital. For the time being we are watching the market to see how the situation develops.

Many commercial developers say that access to bank financing will ultimately shape the situation in the industry this year. Will this also be true for the housing sector?

Definitely. The crisis seems to be coming to an end, but when – and on what scale – new projects kick off once it’s finally over will largely depend on banks.

These have been using stricter policies of late, such as when it comes to their approach to down-payments. Developers used to be able to get bank financing for up to 70 percent of a plot’s value. Today there is no discussing the financing of land purchases – the developer is supposed to buy it on his own and only afterwards can he apply for a loan for a particular project.

Banks are also demanding pre-sales before financing new projects, which is difficult in a situation when there are many completed units on the market.

Do you expect prices to rise in the upcoming months?

Again, this will ultimately depend on access to mortgages, but provided that housing demand continues to rise there will definitely be some increase in prices.

What will happen, in my opinion, will be price differentiation between units in projects introduced to the market this year and unsold – potentially poorly located or otherwise unattractive apartments – which have been on offer for some time and which developers are keen to dispose of.

The average price index will probably stay largely unchanged, but price changes could be significant in the smaller apartment segment.

Why is that?

On the one hand, the residential market client behaves very rationally. If there are unsold units in the market, it usually means there is something wrong with them, not with the potential buyer. The apartments may be overpriced, poorly located or have an unattractive layout. … On the other hand, the crisis has caused Poles to revise their living standard expectations, especially when it comes to apartment sizes – in better times they sometimes bought more than they could really afford. Smaller units are expected to be more popular this year and [in this segment] demand will probably exceed supply. This trend has already been noted by developers and we have also included more small apartments in our new planned projects.