Minister Nowak hopes the scheme will come into force by the middle of next year Courtesy of KPRM

Minister of Transport, Construction and Maritime Economy Sławomir Nowak outlined a new government program intended to make it easier for young people to purchase a first home at a press conference earlier this month.

The newly announced “Mieszkanie dla Młodych” (“Apartment for the Young”) scheme is meant to replace the popular “Family on its Own” subsidized mortgages program for first-home buyers which expires at the end of 2012.

“We have prepared in the ministry a new tool that will support young Poles in the purchase of their first own apartment. There is no need to convince anyone how important having their own apartment is from the perspective of planning a family,” Mr Nowak said at the conference on October 14.

The program is targeted at people aged below 35 and provides for a one-off subsidy amounting to 10 percent of the average apartment construction cost in a particular voivodship. Qualifying units cannot be sized more than 75 sqm and the subsidy will cover a maximum of 50 sqm.

Additionally, families having one or more children will see their subsidy increased to 15 percent and if a third or subsequent child is born after the purchase of the apartment the family will get yet another 5 percent in government subsidy.

Mr Nowak said he hopes the program could come into force in mid-2013. The ministry estimates the initial annual cost of the program at from zł.600-700 million. Up to 36,000 families will benefit from the scheme per year.

Program limitations

Courtesy of BGK

According to Home Broker estimates, such a family could count on a maximum of zł.57,895 when buying a 50-sqm apartment in Warsaw within the Apartment for the Young program. In the Family on its Own scheme, the maximum subsidy amounts to zł.75,480.

The limited scope of the new program will also likely make it less attractive for buyers than the existing scheme. Unlike Family on its Own, Apartment for the Young will only cover the primary market. People building or buying single-family houses will not get the subsidies either.

Meanwhile, units in the secondary market are usually cheaper than those in the primary market and used apartments account for 80 percent of the turnover in the residential market, said Paweł Grząbka, president of real estate advisory CEE Property Group.

From a developer’s perspective, this aspect of the new program is obviously highly welcome, as is the fact that the one-off subsidies will help improve the credit worthiness of buyers and thus drive home sales.

However, a report by Metrohouse & Partnerzy, a real estate brokerage and consultancy, noted that the new scheme will come into force at least half a year after the current program has expired. If buyers decide to wait, the coming months could be a tough period for developers, the study said.