Information on home prices and the situation in the housing and commercial real estate market in Poland in 2017 Q1

June 217 Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 Jacek Łaszek Hanna Augustyniak Krzysztof Olszewski Joanna Waszczuk Marta Widłak Economic Analysis Department

The information was prepared in the Economic Analysis Department for the needs of the NBP governing bodies. The opinions expressed in this publication are authors opinions and they do not present the position of the governing bodies of. 2

Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 Analysis of the situation in the real estate market in Poland in 217 Q1 1 leads to the following conclusions: The primary housing market in the 6 largest cities entered the expansion phase. The peak level of home selling of the previous cycle was exceeded. This activity has not generated excessive tensions in the real estate sector nor in the financial sector yet. No distressing price increases were observed and transactions continued to be largely financed by buyers own funds. Housing supply has so far been flexible and matched growing demand real estate developers started new investment projects and continued the existing ones. The structure of housing offer was well-adjusted to the structure of supply. Maintaining flexible supply is the major challenge in the current situation and the prerequisite for keeping prices stable. In the period under discussion, average offer and transaction prices per square meter of housing in the primary markets (PM) and secondary markets (SM) in all the analysed cities remained stable. Also, prices determined with the use of the hedonic index 2 showed relative stability. In all the analysed groups of cities (Warsaw, 6M, 1M) prices in the primary market were higher than those in the secondary market. Average rent rates per square meter of housing (offer and transaction rates) in Warsaw and 1M, broadly stabilised in the discussed quarter, whereas those in 6M slightly increased. The increase in rent rates in 6M was driven by the growing share of housing in good location, often from the stock built after 22, whose rental cost per square meter was the highest. The indicator of the estimated availability of housing in large cities slightly increased as a result of growth in wages and reached.88 per square meter, posting a rise of.4 square meter as compared to the 27 Q3 minimum. The indicator of the estimated availability of residential mortgage loans 3 for an average household in 7M remained almost stable 4. Housing investment (excluding transaction costs) continues to be relatively profitable. Considering the average achievable rent level in Warsaw and 6M, return on housing investment stands higher than returns on bank deposits and yields on 1-year Treasury bonds and is close to return on 1 The analysis carried out in this issue of the Information is based on data released until 217 Q4. Due to delays in the access to data, some figures contain information up to 216 Q4, inclusive. Data series with average levels of prices per square meter of housing, commercial rent levels or transaction prices per square meter of commercial space reflect the information available at a given moment and may be subject to revision, in order to factor in the new incoming data. Those series are updated on a permanent basis in order to reflect the full set of information available at a particular moment. Data revisions which clean data from errors also bring changes to historical data. Such an approach is used by other central banks and statistical offices. 2 The hedonic housing price index contains an adjustment, factoring in the differences in attributes of housing (e.g. location, usable area, finishing standard) sold in particular periods. The hedonic index is calculated with the imputed method. The hedonic price is an average transaction price from the base period multiplied by the hedonic index. More information in the article by M. Widłak (21), Metody wyznaczania hedonicznych indeksów cen jako sposób kontroli zmian jakości dóbr (Methods of determining hedonic price indices as a method to control quality changes of goods), Wiadomości Statystyczne no. 9. 3 The maximum available residential mortgage loan in a particular market is a measure expressed in PLN thousand, taking into account bank lending requirements and loan parameters (i.e. NBP interest rate, depreciation period (25 years), minimum income after the repayment of loan instalments). This estimate does not take into account changes in banks lending policy, including the criteria of credit granting and terms and conditions of credit granting. 4 A growth in the availability of residential mortgage loans in Gdańsk was driven by a growth of wages in the energy sector. 1

Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 investment in the commercial real estate market. The residential loan servicing costs to rent ratio still enables buyers to finance the cost of credit with income from rent. In the discussed quarter, the value of new residential mortgage loans 5 in PLN (exclusive of renegotiated contracts) increased by PLN 1.9 billion 6, posting an increase of 1.2% as compared to the previous quarter s figure and a growth of 12.3% as compared with 216 Q1. A significantly greater number of loans under the "Mieszkanie dla Młodych" ( Housing for the Young") government-subsidised housing scheme were disbursed. The results of senior loan officer surveys in 217 Q2 7 show that the criteria and terms of lending in the residential mortgage loan segment have remained broadly unchanged. The quality of residential mortgage loans denominated in PLN is still high, with the share of non-performing loans at the end of 217 Q1 standing at approx. 2.5%. The share of housing loans denominated in foreign currency 8 in the currency structure of bank housing loans has been on a gradual decline since 212, which supports the financial and macroeconomic stability. Declining share of residential mortgage loans in foreign currency results both from the fact that banks have ceased to grant such loans to persons who are not in the receipt of regular income in this particular currency, as well as from regular amortisation, early repayments and refinancing of loans denominated in foreign currency with PLN loans. The quality of foreign currency housing loans is still high, although the share of non-performing loans slightly increased, reaching the level of approx. 3.4% at the end of 217 Q1. The estimated high profitability of housing projects persisted for another consecutive quarter, which is associated with high demand, low costs of building materials and construction works, being favourable for several years and the large aggregate land stock for the construction of new housing projects 9. Financial data of real estate developers usually show low profitability of real estate development business. However, the analysis conducted for average investment projects in the biggest markets indicates a sound level of their estimated profitability in housing construction. The results of the estimates are confirmed by a large number of successive new investment projects launched and placed on the market as well as by external investors investment in housing for rent 1. 5 Housing loans are often a form of additional financing of real estate purchase. In the urban housing markets, part of financing comes from the sale of other real estate, while in other markets houses are built with owner s own materials and labour, often on their own land. 6 See also: http://www.nbp.pl/home.aspx?f=/statystyka/pieniezna_i_bankowa/oprocentowanie_n.html,tab,tab 4 OPN2PLN. 7 According to the findings of the senior loan officers survey, The situation in the credit market - results of senior loan officers survey Q2 217, banks experienced an increase in demand, which they largely explained with the popularity of the Mieszkanie dla Młodych (Housing for the Young) scheme among borrowers, forecasts of the housing market situation and the change in households economic situation. In 217 Q2, banks do not plan any material changes in the lending policy, nor do they expect any significant changes in the demand for residential mortgage loans. A few banks only expect a decline in the demand for loans. 8 The share of housing loans granted in PLN in the total housing loans at banks at the end of 217 Q1 reached 61% and was over two times the minimum level (29%) recorded in 29 Q1. 9 Developer land stock for residential construction must be replenished on a continuous basis following the entry into force of the Act (Journal of Laws 216 item 585) of 14 April 216 on the suspension of sale of the Agricultural Property Stock of the State Treasury amending certain other acts, in view of the strong housing production and sales. Developers will certainly soon engage in construction only in cities, on the land designated for construction purposes in the local spatial development plan, which may affect the level of costs and prices. 1 For example, a large foreign real estate fund managing a portfolio with the total value of EUR 6 billion, purchased the second housing project in Poland. The buildings purchased in Warsaw and in Kraków are allocated for rent. 2

Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 According to Coface experts, in the period under discussion, the number of bankruptcies increased in the construction sector 11 - the construction sector was in a standstill caused mainly by a downturn in infrastructure investment. This has boosted competition among construction companies which helped to maintain high profitability of developer investment in the case of housing projects. The stock of unsold housing in Poland s six largest cities 12 decreased in the analysed quarter by approx. 2.5 thousand dwellings, amounting to 5.2 thousand. At the same time, the number of dwellings under construction increased 13. Growth in housing demand was higher than growth in supply. In the analysed period, home selling time in the primary market 14 in 6M slightly decreased to 3 quarters. The number of dwellings and projects under construction weighted by sale and finished dwellings offered for sale decreased. So far, real estate developers managed to appropriately match the structure of home size with housing demand, in contrast to the secondary housing market where the supply results from the housing stock structure. As price continues to be the main home choice criterion in the segment of the most popular real estate, compact dwellings i.e. two-room, smaller size apartments, enjoy the greatest popularity. Permanent demand for greater dwellings, i.e. over 6 square meters, is also recorded. 217 Q1 saw a rise in the number of building permits issued for new housing, especially in the case of the already existing projects. The estimated high profit margins of real estate developers and high rate of return on residential construction projects as well as high demand resulted in a bigger number of issued building permits 15 as well as the number of completed and ready for occupancy dwellings 16. Under the MDM government-subsidized scheme, which is being gradually phased out, in 217 Q1 out of the total of 18 56 applications submitted, subsidies in the total amount of approx. PLN.5 billion were disbursed to 17253 borrowers. Since the launch of the scheme (214), subsidies in the total amount of PLN 1.9 billion were disbursed to 75 248 borrowers. Considerable disbursements 11 In 216, a new Restructuring Act came into force. It provides that the main goal of the restructuring proceedings, in addition to satisfying creditors, is to avoid debtor s bankruptcy by allowing debtor s restructuring through entering into an arrangement with creditors, and in the event of the recovery proceedings - also by undertaking recovery measures, while safeguarding the legitimate rights of creditors. Under the current Act, the restructuring proceedings concern both insolvent companies and those threatened with insolvency. In accordance with the opinion of Coface experts, the downturn in infrastructure investment in 217 Q1 resulted in declining income of many construction companies, the pressure on signing new contracts at lower prices, often at borderline profitability, and the necessity to cut costs. Consequently, many construction companies started experiencing liquidity problems which, in the sector of construction services, were additionally exacerbated by the introduction of VAT reverse charge. At present, the construction sector faces liquidity problems. Following a period of declines, in the first quarter a growth in the bankruptcy rate by 65% y/y is observed (which is partially the base effect). 12 In accordance with the report by REAS: Housing market in Poland in 217 Q1. 13 According to GUS data, in 217 Q1 the number of home starts in Poland reached 44.2 thousand, i.e. approx. 9.9 thousand more than in 216 Q1 and approx. 3.4 thousand more than in the previous quarter. 14 The home selling time in the primary market, calculated by REAS, is the ratio of the size of the offer and the average quarterly number of dwellings sold, expressed by the number of quarters needed to sell out the offered housing, assuming sales are kept at a level observed in four preceding quarters. 15 According to GUS data, in 217 Q1 the number of issued building permits reached 6.2 thousand, i.e. exceeding by approx. 18.1 thousand the number recorded in 216 Q1 and by approx. 3. thousand the number recorded in the previous quarter. 16 According to GUS data, in 217 Q1 the number of dwellings completed and made ready for occupancy reached 4.3 thousand, i.e. exceeding by 3. thousand the number recorded in 216 Q1 and by approx. 1. thousand less than the number recorded in the previous quarter. 3

Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 effected so far should also be attributed to both the 215 amendment of the Act extending the scheme to include secondary market housing as well as the announcement of the decision to discontinue the scheme after 218. On 1 February 217, the BKG ceased to accept applications for subsidies to housing purchases in 217, whereas on 7 April 217, the bank ceased to accept applications for the first half of funds to be disbursed in 218 17. In January 218, the Bank will relaunch the procedure of accepting the last applications under the MDM housing scheme. In 217 Q1 and Q2, numerous minor increases and decreases in price limits of housing eligible under the MDM housing scheme, were observed in 16 largest cities 18. As the funds intended for subsidies in the current year were exhausted, this should not affect the housing market. Gradual cessation of payment of subsidies to interest on mortgage loans granted under the Family on their Own ( RNS ) housing scheme has not posed so far any major problem to servicing those loans thanks to historically low interest levels, sound situation in the labour market and wage increases 19. Restricting the fiscal stimulus measures in this market is a positive phenomenon, in particular, in the current phase of a very high demand. Under the National Housing Scheme adopted by the Government in September 216 2, comprehensively addressing a wide range of medium-term housing policy issues, several initiatives were launched. Since 216 Q4, works related to establishing the National Housing Fund (NFM) 21 at BGK Nieruchomości have been in progress. Land to the NFM will be offered by local government units and the Treasury, but also by companies and housing cooperatives. The Draft Act on 17 The pool of funds to be disbursed in 218 (the last year of the scheme) is PLN 762 million, and their use resulting from entries in the register of home buyers at the end of April 217 amounted to 5.%. 18 Retrieval of information on housing transactions with the area and price meeting the conditions of the Housing for the Young scheme, concluded in the period from 216 Q2 to 217 Q1, from the NBP base, with breakdown into the primary and secondary market, made it possible to identify the possibilities to use the scheme in 16M. The highest share of PM transactions meeting the conditions of the scheme in the analysed quarter was recorded in Zielona Góra, Kielce and Białystok, whereas in the case of SM transactions - in Kielce, Zielona Góra and Bydgoszcz. The lowest availability of housing on the PM was recorded in Łódź and Warsaw, and on the SM - in Warsaw and Kraków. 19 According to the information provided by the BGK, the total of 191 989 dwellings were purchased under the RNS housing scheme in the years 27-212, with the use of loans totalling PLN 34.93 billion and budget subsidies in the amount of PLN 3.55 billion. 2 On 27 September 216, the Council of Ministers approved resolution No. 115/216 on the adoption of the National Housing Scheme (NPM). The main goal of the NPM is to make housing more available to medium- and low-income earners and improve the technical condition of the housing stock, ensuring, at the same time, more efficient energy use. For more detailed description of the assumptions of the NPM see: The Information on home prices and the situation in the housing and commercial real estate market in Poland in 216 Q3 (NBP, December 216). At the beginning of April 217, the Deputy Minister of Infrastructure and Construction, Kazimierz Smoliński informed that so far over 7 letters of intent had been signed for the construction of 2 thousand dwellings under the Housing Plus Scheme. The first dwellings should be ready in 217. 21 The Draft Act of the Minister of Infrastructure and Construction on the National Housing Fund and the transfer of land owned by the Treasury for housing purposes is being debated upon. In February 217, the Draft Act was subject to the issuance of opinions. The programme will largely rely on construction sites owned by public entities. These areas constitute both a place for future investments as well as assets that, through sales, will provide funds for the implementation of the programme. Preliminary assessment of these resources indicates the possibility of construction of over 56 thousand dwellings on the area of about 459 ha. Initially, approximately 7 municipalities from all over Poland joined the Housing Plus Scheme. In December 216, the construction of first buildings in Biała Podlaska (186 dwellings) and Jarocin (258 dwellings) was commenced. Investment contracts were also signed in Toruń (over 3 dwellings) and Katowice (over 5 dwellings), where construction works will be launched after all administrative formalities have been completed. Over 2 ha of land were acquired in cooperation with local governments, where approximately 2 thousand modern dwellings for rent may be built with homeownership option. In addition, real estate is acquired from private investors and entities using the state-owned land. Under the Housing Plus Scheme, representatives of PKP made available the first 17 plots of land belonging to the State Railway. 4

Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 Individual Housing Accounts (IKM) 22 should be sent to the Parliament for reading in the first half of 217. The Ministry of Finance assumes that IKM may be opened as of 218 and subsidy disbursement will start as of 219 when the majority of commitments connected with the Housing for the Young scheme expire. Under the Rental Housing Fund, established by the BGK, by the end of 216 over 3.3 thousand dwellings were contracted, of which over 9 were made available for rent 23. Under the first two editions of the Scheme supporting the construction of social housing for rent, 24 the BGK accepted applications for preferential loans intended to finance over 4,6 dwellings. The call for proposals under the third edition of the scheme will be launched in September 217. The scheme has been operating since 215 and it is included in the National Housing Programme is an important part of the government s package Housing Plus. Under the programme of supporting the creation of municipal housing, protected housing, night shelters and shelters for the homeless, operating since 27, in 217 the BGK has at its disposal the pool of funds totalling approx. PLN 162.5 million 25 (planned PLN 15. plus unused funds carried forward in the amount of PLN 12.5), whereas in 217 Q1 applications for the amount of PLN 75 million were submitted. In mid- 217, the pilot co-financing of protected housing activities pursued by local governments should be launched, as announced by the Deputy Minister of Family, Labour and Social Policy, Elżbieta Bojanowska. The amount of PLN 2 million was allocated for this purpose. Protected housing is used by the elderly and the disabled; it is still difficult to specify cities where the pilot programme will be launched. Since February 216, the Borrowers Support Fund has been operating 26, offering 22 According to the information on the website of the National Housing Program (NPM), the Government is planning to create a provision in the amount of PLN 4.41 for the payment of subsidies under the Individual Housing Accounts (IKM) scheme. 23 Buildings in Poznań, Piaseczno and Kraków are practically completely leased; the projects in Warsaw, Wrocław still have vacancies, similarly to the investment in Katowice at ul. Pułaskiego, which was put on the market at the beginning of May 217. Nearly 2.1 thousand dwellings are still under construction, and almost 5 at the final stage of the investment decision. In 217, further projects will be completed and made available for occupancy in Poznań, Warszawa, Katowice, Kraków and Wrocław. In 218, the Fund s first investments are to be implemented in Łódź and further ones in Gdańsk, Kraków, Poznań and Warszawa. By the end of 22, the Rental Housing Fund (FMW) is expected to offer about 2 thousand dwellings for rent. 24 The provisions of the Act (Journal of Laws of 12 January 217, item 79) enable the BGK to grant loans to social housing societies TBS, municipal companies and housing cooperatives, which, under current conditions, would bear interest at the rate of approx. 1.7% (WIBOR 3M), with 1.3 percentage point margin being financed by the state budget. The scheme is spread over 1 years during which the BGK should lend PLN 4.5 billion for the construction of social housing for rent (the construction of minimum 3 thousand dwellings is assumed). In 216, the BGK concluded the first contracts under this scheme. In accordance with the provisions of the Act, it will not be possible to repurchase dwellings built with the use of BGK's preferential loans. There are restrictions in access to home rental depending on the tenants income. The Act provides for income verification every two years. The rent rate may not exceed 5% of the replacement value of the dwelling in annual terms. In 216 under the two first editions of the scheme, the BGK received 99 applications for the total amount of PLN 563 million intended to finance the construction of 4 619 dwellings. The first dwellings financed under the scheme are supposed to be completed and made available for occupancy at the turn of 217/218. Under the third edition of the scheme, the BGK will grant preferential financing in the total amount of minimum PLN 88 million. 25 In accordance with the decision of the Minister of Infrastructure and Construction of 15 March 217, the amount allocated for the financial support from the Subsidy Fund will be increased by the amount of PLN 12.5 million of unused funds dedicated to the implementation of this programme. 26In accordance with the Act (Journal of Laws of 9 October 215 item 1925) on 19 February 216 the Borrowers Support Fund (FWK) started granting refundable assistance, on preferential terms, to borrowers facing difficult situation. Those borrowers are eligible for assistance who, on the day of submitting a subsidy application, have an unemployed status or when their monthly mortgage instalment exceeds 6% of monthly income earned by the borrower s household. Interest-free, yet refundable assistance in the amount of up to PLN 1.5 thousand will be extended for a maximum period of 18 months. It is possible to apply for the support in bank branches and SKOK credit unions which granted housing loans. Reimbursement starts two years after the assistance was granted and may take 8 years. Decisions concerning granting assistance to borrowers are taken by the lending bank. Persons being owners of another house or dwelling are not eligible for this form of assistance. Money from the Fund is not transferred directly to the borrower, the instalments are settled by the Fund directly to the credit account of the lending bank. The Fund has at its disposal funds originating from contributions of banks and SKOK credit unions, on a pro rata basis, in relation to 5

Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 refundable assistance to borrowers (including holders of a housing loan), facing temporary problems with loan repayment. The commercial real estate markets continued to see increasing imbalance, resulting from the oversupply of space for rent in relation to the relatively stable demand. This trend was mainly related to rental of office and retail and service space. The continuing high availability of foreign financing contributed to the fast growth in fixed capital formation. This phenomenon can be mostly associated with a low level of interest rates in developed countries, i.e. a low opportunity cost. The value of transactions in 217 Q1 exceeded PLN 5 million, whereas approximately half of this amount was invested in hotels. The status of loans to corporations for real estate purchases decreased from PLN 53 billion in the previous quarter to PLN 51.3 billion. The quality of loans to developers slightly improved and the high indicator of non-performing loans (22%) is mainly the result of banks keeping in their portfolios loans granted in the previous years. 27. The pool of loans for office space remains stable and amounted to PLN 15 billion, while the share of non-performing loans continues at a level of approx. 5%. Rents for A class office space in Warsaw slightly increased, whereas the vacancy rate of office space in the whole capital city decreased from 14.2% in the previous quarter to 14.1% 28 as a consequence of increased activity of tenants. Nevertheless, the level of vacancy may be still assessed as high and monthly rents denominated in EUR per square meter in B class office buildings are on the decline. Such circumstances may be unfavourable for investors owning older office buildings or those in poorer location. On the retail space market, rents in commercial centres in cities all over the country show a slight downward trend, however, in large cities, rents for 1-5 sq. m premises in commercial centres located in economically important parts of cities remain stable. Similar developments may be observed on markets where small retail and service premises are sold where the median of offer price across Poland shows a downward trend, yet, remains unchanged in large cities. the size of the portfolio of residential loans of households, who delay in repayment of the capital or the interest more than 9 days. If necessary, the FWK will be supplied with further funds, e.g. if its amount falls below PLN 1 million, the Fund will be replenished to the amount to PLN 3 million. According to the information provided by the BGK, in 217 Q1, 99 agreements for granting the support in the amount of PLN 2.2 million were concluded. As at the end of March 217, the FWK had at its disposal the amount of PLN 593.8 million, out of the total pool of PLN 6 million. 27 See The Financial Stability Report, NBP, June 217, chapter 2. 28 See Colliers International Report: Market Insights, 217 Q1, Poland. 6

Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 The figures below describe the most important developments in the housing market in Poland s major cities in 217 Q1. Charts and figures present: 1) home prices (Figures 1 14), 2) availability of loan-financed housing, loan availability, profitability of housing investment (Figures 15 2), 3) mortgage loan disbursements and interest rates (Figures 21 28), 4) operating profitability of housing and real estate development projects, costs of construction and assembly output and economic situation of real estate developers in Poland (Figures 29-46), 5) housing construction and the residential market in selected cities in Poland (Figures 47 59), 6) housing policy (Figures 6-71). 7) commercial real estate (Figures 72-75). The analysis of housing prices, offer prices, transaction prices and hedonic prices in the primary and secondary markets as well as housing rents relies on the data coming from the housing market survey of the Real Estate Market Database (BaRN) 29. On the other hand, as part of the survey of the commercial real estate market, the Commercial Real Estate Market Database (BaNK) data on rent, offer prices and transaction prices of commercial real estate are collected and analysed. In addition, the analyses used data from PONT Info Nieruchomości, AMRON and SARFIN Polish Banks Association and Comparables.pl. The analyses and reports of REAS, the Polish Financial Supervision Authority and the aggregate credit data from the Credit Information Bureau were also used. For the structural market analysis, data published by the Central Statistical Office and many studies containing sector data were used. 29The survey of residential and commercial real estate prices in Poland s selected cities for 216 Q1 was published in the Decree of the Council of Ministers of 27 August 214 on the Programme for Surveys in Public Statistics for 215 (Journal of Laws of 214 item 133), symbol 1.26.9 (73). The obligation to submit statistical data results from Article 3 item 3 of the Act of 29 June 1995 on public statistics (Journal of Laws of 212 item 591) and from the Decree of the Council of Ministers referred to above. The reporting forms were announced in the Decree of the Prime Minister of 18 March 215 on reporting forms, completion instructions and statistical questionnaires and questionnaire forms used in surveys of public statistics for 215 (Journal of Laws of 215 item 561). Since the survey is carried out by NBP, the Bank publishes the surveys on its website. In listings related to 217 Q1, approx. 112.7 thousand records were collected, including approx. 26.7% of records concerning transactions and 76.3% of records concerning offers. Altogether over 2.3 million records were collected in the base, including 21.4% of records concerning transactions and 78.6% of records concerning offers. 7

Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 List of abbreviations 5M 6M 7M 1M BaNK BaRN BIK CPI DFD GD GUS IRR EURIBOR FMW KNF KRS LIBOR LTV MDM IFRS NBP PONT REAS RNS PM PAS SM ROE WIBOR WIG2 ZBP ZKPK 5 cities: Gdańsk, Kraków, Łódź, Poznań, Wrocław 6 cities: Gdańsk, Gdynia, Kraków, Łódź, Poznań, Wrocław 7 cities: Gdańsk, Gdynia, Kraków, Łódź, Poznań, Warszawa, Wrocław 1 cities: Białystok, Bydgoszcz, Katowice, Kielce, Lublin, Olsztyn, Opole, Rzeszów, Szczecin, Zielona Góra Commercial Real Estate Database Real Estate Database Credit Information Bureau Consumer Price Index Large real estate development company Households Central Statistical Office Internal Rate of Return Euro Interbank Offer Rate Rental Housing Fund Financial Supervision Authority National Court Register (Krajowy Rejestr Sądowy) London Interbank Offered Rate Loan-to-Value ratio Government-subsidised housing scheme Mieszkanie dla Młodych (Housing for the Young) International Financial Reporting Standards PONT Info Nieruchomości Real Estate Advisory System Government-subsidized housing scheme Rodzina na Swoim (Family on their Own) Primary housing market Polish Accounting Standards Secondary housing market (existing housing stock) Return on Equity Warsaw Interbank Offered Rate Index including top 2 companies listed on the Warsaw Stock Exchange with the highest value of publicly traded shares The Polish Bank Association Accumulated index of changes in banks credit policy criteria 8

III 26 II II II II II II II II II II III 26 II II II II II II II II II II III 26 II II II II II II II II II II III 26 II II II II II II II II II II III 26 II II II II II II II II II II III 26 II II II II II II II II II II Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 1. Transaction, hedonic and offer prices of housing in the primary market (PM) and in the secondary market (SM) Figure 1 Transaction prices per square meter of housing PM 1 9 8 7 6 5 4 3 2 Figure 2 Transaction prices per square meter of housing SM 1 9 8 7 6 5 4 3 2 Gdańsk Gdynia Kraków Łódź Poznań Wrocław Warszawa Note: the home price database of NBP (BaRN) has existed since 26 Q3; description of the database may be found in the Report on home prices and the situation in housing and commercial real estate market in Poland in 215 available on the NBP website. Figure 3 Weighted average price per square meter of housing, offers and transactions - PM 1 9 8 7 6 5 4 3 2 Gdańsk Gdynia Kraków Łódź Poznań Wrocław Warszawa Figure 4 Weighted average price per square meter of housing, offers and transactions - SM 1 9 8 7 6 5 4 3 2 Warszawa RPT 6M RPT 1M RPT Warszawa RPO 6M RPO 1M RPO Note to Figures 3-14: the price weighted with the share of housing in the market stock, the average price for Warszawa; 6M are the following cities: Gdańsk, Gdynia, Kraków, Łódź, Poznań, Wrocław; 1M are the following cities: Białystok, Bydgoszcz, Katowice, Kielce, Lublin, Olsztyn, Opole, Rzeszów, Szczecin, Zielona Góra. Figure 5 Ratio of the average weighted transaction price per square meter of housing PM to SM 1,25 1,2 1,15 1,1 1,5 1,,95,9,85,8 Warszawa RWT 6M RWT 1M RWT Warszawa RWO 6M RWO 1M RWO Warszawa hed. 5M hed. 1M hed. Figure 6 Ratio of the average weighted transaction price to offer price per square meter of housing SM 1,35 1,3 1,25 1,2 1,15 1,1 1,5 1,,95 1,4 1,2 1,,8,6,4,2, Warszawa 6M 1M Warszawa RP 6M RP 1M RP Warszawa RW 6M RW 1M RW O/T Warszawa (P oś) O/T 6M (P oś) O/T 1M (P oś) 9

III 26 II II II II II II II II II II III 26 II II II II II II II II II II III 26 II II II II II II II II II II III 26 II II II II II II II II II II III 26 II II II II II II II II II II III 26 II II II II II II II II II II Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 Figure 7 Weighted average and real price per square meter of housing in the primary market to CPI-deflated price (26 Q3 = 1) 19 18 17 16 15 14 13 12 11 1 9 8 Figure 8 Weighted average and real price per square meter of housing in the secondary market to CPIdeflated price (26 Q3 = 1) 19 18 17 16 15 14 13 12 11 1 9 8 Warszawa RP T 6M RP T 1M RP T Source: NBP, ZBP (AMRON), GUS. Warszawa RP T defl. CPI 6M RP T defl. CPI. 1M RP T defl. CPI Figure 9 Weighted average transaction price per square meter of housing in SM and price adjusted by the hedonic price index 1 9 8 7 6 5 4 3 2 Warszawa RW T 6M RW T 1M RW T Source: NBP, ZBP (AMRON), GUS. Warszawa RW T defl. CPI 6M RW T defl. CPI. 1M RW T defl. CPI Figure 1 Weighted average transaction price per square meter of housing in SM, adjusted by the hedonic price index, in 6M 1 9 8 7 6 5 4 3 2 Warszawa hed. 6M hed. 1M hed. Warszawa RW 6M RW 1M RW Figure 11 Average offer prices per square meter of housing - PM, selected markets 1 9 8 7 6 5 4 3 2 Gdańsk hed. Kraków hed. Łódź hed. Poznań hed. Warszawa hed. Wrocław hed. 6M hed. Figure 12 Average offer prices per square meter of housing in the SM in 7M 1 9 8 7 6 5 4 3 Warszawa 5M 1M Note to Figures 11-12: prices are collected from all available sources. Source: PONT Info Nieruchomości Gdańsk Gdynia Łódź Kraków Poznań Warszawa Wrocław Source: PONT Info Nieruchomości 1

I 26 I 26 zmiana w % I 26 Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 Figure 13 Average offer prices per square meter of housing, new launched housing contracts PM, selected markets 11 1 9 8 7 6 5 4 Figure 14 Average rent rates (offers and transactions) per square meter of housing - SM, selected cities 6 5 4 3 2 1 Łódź Kraków Poznań Trójmiasto Wrocław Warszawa śr.6m Note: prices refer only to new contracts put on the market for the Warszawa 1M śr.waż.zasobem 6M śr.waż.zasobem first time. Source: REAS. 2. Availability of loan-financed housing, loan availability, profitability of housing investment Figure 15 Estimated availability of loan-financed housing in 7M and the average for 7M 15 13 11 9 7 5 3 Figure 16 Quarterly changes in the estimated availability of loan-financed housing in 7M and the force and directions of the impact of particular components 15% 1% 5% % -5% -1% -15% -2% -25% Gdańsk Gdynia Kraków Łódź Poznań Warszawa Wrocław śr. 7M cena (śr.rp i RW) wynagrodzenia maks.udział dochodu przezn.na spłatę stopa procentowa kredytowa dostępność mieszkania Availability of loan-financed housing a measure specifying how many square meters of housing may be purchased with a mortgage loan obtained basing on the average monthly wage in the enterprises sector in a particular market (GUS), in view of bank s lending requirements and loan parameters (interest rate, depreciation period, social minimum wage understood as the minimum income after payment of loan instalments) at an average transaction price of housing (4% in the primary market and 6% in the secondary market) in a particular market (BaRN). The pace of changes of the index and differences between particular markets provide important information. ZKPK Index accumulated index of changes in banks lending policy criteria; positive values mean easing, and negative values tightening of lending policy as compared to the initial period i.e. 23 Q4. Computing methods of the index are described in the Financial Stability Report, December 212, NBP. Source: NBP, GUS. Source: NBP, GUS. 11

III 26 II II II II II II II II II II I 26 I 25 I 26 tys. zł Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 Figure 17 Estimates of available mortgage loans and accumulated index of changes in banks lending policy criteria (ZKPK, right-hand scale) 5 45 4 35 3 25 2 15 1 2-2 -4-6 -8 Figure 18 Costs of a housing loan for consumer as deflated with CPI or wage growth in the enterprise sector -1 8% 6% 4% 2% % -2% -4% -6% -8% Gdańsk Gdynia Kraków Łódź Poznań Warszawa Wrocław śr. 7M ZKPK P. oś Available housing loan a measure (expressed in PLN thousand) specifying the potential maximum housing loan in a particular market, taking into account banks lending requirements and loan parameters (i.e. interest rate, depreciation period, minimum wage as the minimum income after payment of loan instalments). Source: NBP, GUS. Figure 19 Profitability of home rental (average in 7 M) as compared with alternative GD investments 5,5 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1,,5 nom.st.proc.kred.mieszk.pln real.st.proc.kred.mieszk.pln def. CPI real.st.proc.kred.mieszk.pln dla kred.rns / MDM def.cpi real.st.proc.kred.mieszk.pln dla kred.rns / MDM def.dyn.wynagr.(wyrówn.) real.st.proc.kred.mieszk.pln def. dyn.wynagr.(wyrówn.) Note: values below denote negative real interest rate for the borrower; red lines separate the annual period of the absence of the government subsidised housing schemes, i.e. RNS (operating in 27-212) and MDM (operating in 214-218). Source: NBP, GUS, BGK. Figure 2 Estimate of housing demand in PM (average in 7M) and its components 25 2 15 1 5-5 -1-15 -2-25 -3 6 5 4 3 2 1-1 - 2 najem do st.kred.mieszk.gd najem do st.kap.nier.kom. najem do st.dep.stan GD najem do st.obl.1l. najem do inw.finans.gd popyt całkowity szacowany popyt konsumpcyjny (p.oś) popyt spekulacyjny (p.oś) popyt całkowity rzeczywisty popyt inwestycyjny (p.oś) Note to Figure 19: values exceeding 1 denote higher profitability of purchasing a property for rental to third persons than other GD investment. This analysis does not take into account high transaction costs in the housing market and potentially long payback periods. Note to Figure 2: aggregate demand factor consists of consumer demand - 6%, investment demand - 3% and speculative investor s profit - 1%; the weights were estimated by experts, the index presents moving average of two consecutive quarters. Source: NBP, GUS. Source: NBP, GUS. 12

I 25 I 26 I 25 I 26 I 23 I 24 I 25 I 26 I 25 I 26 wartość w mld zł liczba w tys. I 23 I 24 I 25 I 26 I 24 I 25 I 26 zmiany kwartalne w mld zł stan w mld zł Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 3. Disbursements of residential mortgage loans, interest rates Figure 21 Balance and quarter-on-quarter changes in housing loan receivables from GD after adjustments and the currency structure of quarter-on-quarter increases in housing loan receivables (PLN billion) 14 12 1 8 6 4 2-2 -4 5 4 3 2 1-1 Figure 22 Currency structure of housing loan receivables from GD resulting from residential mortgage loans (%) walutowe złotowe 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % mieszkaniowe kredyty walutowe po korektach (zm.kw.) (L oś) mieszkaniowe kredyty złotowe (zm.kw) (L oś) stan kredytu mieszkaniowego (P oś) w tym stan kredytu walutowego (P oś) Figure 23 New housing loans: value and number, including foreign currency loans 18 16 14 12 1 8 6 4 2 9 8 7 6 5 4 3 2 1 Figure 24 Territorial structure of the value of new housing loan contracts in Poland 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 2 18 16 14 12 1 8 6 4 2 - wartość PLN liczba PLN w tym wartość walutowe w tym liczba walutowe Note to Figures 23 and 24: the data inform about signed residential mortgage loan contracts and not the actual disbursement of residential mortgage loans. Source: ZBP. Source: BIK. Figure 25 Interest rates on residential loans for GD in Poland 9% 8% 7% 6% 5% 4% 3% 2% 1% Warszawa 6M 1M PP Polska (P oś) Figure 26 Bank margins (for WIBOR, LIBOR, EURIBOR 3M) in the case of new residential mortgage loans 4,5% 4,% 3,5% 3,% 2,5% 2,% 1,5% 1,%,5%,% PLN nowe CHF nowe EUR nowe PLN stany CHF stany Note: Foreign currency loans practically ceased to be granted in 212. %PLNnowe - WIBOR3M %CHFnowe-LIBOR3M %PLNstan - WIBOR3M %PLNnowe-st.dep.GD stany %PLNstan-st.dep.GD stany Note: bank margin is the difference between housing loan rate (NBP data) and the WIBOR3M rate or the LIBORCHF3M rate. 13

II II II II II II II II IV 28 I IV 29 I IV 21 I IV 211 I IV 212 I IV 213 I IV 214 I IV 215 I IV 216 Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 Table 1 Estimated gross mortgage loan disbursements to households in Poland and the estimated value of cash and loanfinanced purchases of developer housing in 7 M (in PLN million) Date Estimated value of mortgage loans in Poland Estimated value of housing transactions in the PM in 7M Estimated value of disbursed loans with client s down-payment for home purchases in the PM in 7M Estimated value of cash home purchases in the PM in 7M Estimated share of cash home purchases in the PM in 7M 213 Q1 6295 275 1121 1584 59% 213 Q2 7867 347 1428 162 53% 213 Q3 914 3599 169 198 53% 213 Q4 984 495 1773 2321 57% 214 Q1 7571 3852 1478 2374 62% 214 Q2 8899 3671 1737 1934 53% 214 Q3 8894 3649 1736 1913 52% 214 Q4 8122 382 1585 2217 58% 215 Q1 8996 42 1756 2264 56% 215 Q2 164 4442 277 2365 53% 215 Q3 1341 466 219 2587 56% 215 Q4 11237 4967 2194 2773 56% 216 Q1 9742 539 192 3138 62% 216 Q2 11661 5345 2276 369 57% 216 Q3 9632 541 188 3161 63% 216 Q4 9933 644 1939 4465 7% 217 Q1 1945 653 2137 4367 67% Note: the estimates are based on the following assumptions: In the period 212 Q1-214 Q4, the estimated value of newly granted loans in Poland in particular quarters was based on increases in the volume of loans to households adjusted for loan amortisation and flows between the foreign currency loan portfolio and the zloty loan portfolio, available in the NBP reporting. The entire banking system was taken into account, including SKOK credit unions. Since 215 Q1, the value of disbursements has been estimated based on data collected from banks. In order to calculate the estimated value of PM transactions in 7M (Gdańsk, Gdynia, Kraków, Łódź, Poznań, Warszawa, Wrocław), the average home price was multiplied by the average home size in square meters and the number of housing units sold (based on REAS data). On the basis of ZBP data it was assumed that the value of newly granted loans for the purchase of housing in the primary markets of 7M in 212 accounted for 5% of the value of housing loans in those cities, whereas at the end of 213 this share amounted to approx. 57%. The estimated value of cash transactions was calculated as the difference between transactions in 7M and disbursements of loans requiring buyer s own contribution (down-payment). Data concerning prices for all the periods have been updated. Source: NBP, REAS, ZBP, GUS. Figure 27 GD loans for housing real estate and indicator of loans recognised as non-performing loans 4 1% 35 9% 8% 3 7% 25 6% 2 5% 15 4% 3% 1 2% 5 1% % Figure 28 Estimated ROE on residential mortgage loans denominated in PLN for banks in Poland 8% 6% 4% 2% % -2% -4% -6% -8% 2% 15% 1% 5% % -5% -1% -15% -2% Kredyty hipoteczne mieszkaniowe (L. oś) Wskaźnik kredytów zagrożonych na nier. mieszk. (P oś) Wskaźnik kredytów zagrożonych na nier. mieszk. złotowych (P oś) Wskaźnik kredytów zagrożonych na nier. mieszk. walutowych (P oś) Obciążenie kredytów odpisami Efektywny koszt finansowania kredytów Efektywne oprocentowanie kredytów Skorygowana marża odsetkowa na kredytach ROE (P oś) 14

I 24 I 25 I 26 I = 1 Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 Note: receivables (loans) with determined loss of value receivables from portfolio B, in relation to which objective premises of loss in value were identified and a decrease in the expected value of future cash flows (in banks using the IFRS) or which were recognized as non-performing receivables in accordance with the Ordinance of the Minister of Finance on establishing provisions against the risk associated with banking activities (in banks using the PAS). Note: Income and costs related to the mortgage loan portfolio are provided excluding costs of conducting bank s activity and taxes. Estimated ROE is calculated as the adjusted interest margin on mortgage loans with respect to the minimum required downpayment (buyer s own contribution). Calculation based on KNF publication, Solvency ratio - until 214, Total capital ratio - as of 214. The adjusted interest margin is the result of all income being added and all costs being deducted. The effective cost of financing was computed based on the WIBOR rates by adding estimative costs related to bank's own financing. Source: NBP, KNF. 4. Operating profitability of housing and real estate development projects, costs of construction and assembly output and economic situation of real estate developers in Poland Figure 29 Rescaled exchange indices: WIG2 and for real estate developers and construction companies (27 Q2=1) 12 1 8 6 4 2 WIG2 WIG-NIER. WIG-BUD. Note: harmonized data, 27 Q2 = 1. The WIG index for real estate developers has been recorded since 27 Q2; 217 Q1 as at 2 February 217. Source: Warsaw Stock Exchange. Figure 3 Number of bankruptcies in particular sectors (as at the end of December) 25 2 15 1 5 29 21 211 212 213 214 215 216 217 Pozostałe upadłości Działalność związana z obsługą rynku nieruchomości Budownictwo (firmy budowlane) Note: breakdown according to the first entry into the KRS. Source: Coface Poland. Note to Figure 3: as of 1 January 216, the former provisions in the bankruptcy law were amended - the new restructuring law entered into force. The main goal of the restructuring proceedings, in addition to satisfying creditors, is to avoid debtor s bankruptcy by allowing debtor s restructuring through entering into an arrangement with creditors, in the event of the recovery proceedings - also by carrying out recovery measures, while safeguarding the legitimate rights of creditors. A significant change is also the fact that according to the current law, the restructuring proceedings concern both insolvent companies and those threatened with insolvency, accordingly, the statistics show not only the number of bankrupts, but also companies at risk of bankruptcy. Previously, the applicable law allowed to declare arrangement bankruptcy only if the company was actually insolvent. 15

Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 Figure31 Estimated share of direct construction costs per square meter of the residential building s usable area (type 1122-32 3 ) in the transaction price in the PM) 75% 7% 65% 6% 55% 5% 45% 4% 35% 3% Figure 32 Estimated rate of return from investment projects (type 1122-32 3/ ) in the largest cities and the reported rate of return of real estate developers (DFD*) 45% 4% 35% 3% 25% 2% 15% 1% 5% % Gdańsk Kraków Łodź Poznań Wrocław Warszawa Gdańsk Kraków Łodź Poznań Wrocław Warszawa DFD Note to Figure 32: the estimated rate of return on equity from typical new investment projects assuming the currently applicable interest rates, banks requirements and production costs; calculated on the basis of the diagram included in Annex 3 of the Report on the situation of the Polish market of residential and commercial real estate in 211. Since 214, NBP s own appraisal of land for multi-family housing construction has been used, which has changed the previous estimates, in particular, for Poznań. */DFD ROE of an average large real estate development company according to GUS data (employment size =>5 persons). Source: NBP based on Sekocenbud. Source: NBP based on Sekocenbud, GUS (F1). Figure 33 Predicted changes in prices of construction and assembly works (+3C) and growth in construction costs of usable area of a residential building (type 1122-32 3/ ) 6% 5% 4% 3% 2% 1% % -1% -2% -3% Figure 34 Average cost of construction of square meter of the residential building s usable area (type 1122-32 3 ) in selected markets (PLN/sq. m) 36 35 34 33 32 31 3 29 28 27 26 25 24 Przewidywane zmiany cen robót bud.-montaż. (+3M) wg ankiety GUS Dynamika kw/kw faktycznych kosztów budowy wg Sekocenbud Warszawa 6M 1M Polska Source: NBP based on GUS data (business conditions survey), Sekocenbud. Source: NBP based on Sekocenbud. 3 Type 1122-32 building monitored by NBP as of 216 1H based on Sekocenbud data: an average residential multi-family building, five-storey, with an underground garage; construction technology: continuous footing, construction walls and ceilings reinforced concrete, monolithic, masonry curtain walls made from ceramic hollow brick units (MAX); change in the type of the building analysed is associated with closing of cost estimation for facility 1121. Analytical assumptions related to building 1121 have been maintained. 16

Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 Figure 35 Warsaw estimated structure of price per square meter of housing usable area in the PM (building type 1122-32 3/ ) for consumer. 8 7 6 5 4 3 2 1 Figure 36 Kraków estimated structure of price per square meter of housing usable area in the PM (building type 1122-32 3/ building) for consumers. 8 7 6 5 4 3 2 1 ziemia + zagosp.terenu projekt koszty budowy koszt kredytu koszty ogólne zysk deweloperski Source: NBP based on Sekocenbud, REAS. Figure 37 Gdańsk - estimated structure of price per square meter of housing usable area in the PM (building type 1122-32 3/ ) for consumers. 7 6 5 4 3 2 1 ziemia + zagosp.terenu projekt koszty budowy koszt kredytu koszty ogólne zysk deweloperski Source: NBP based on Sekocenbud, REAS. Figure 38 Poznań estimated structure of price per square meter of housing usable area in the PM (building type 1122-32 3/ building) for consumers. 7 6 5 4 3 2 1 ziemia + zagosp.terenu projekt koszty budowy koszt kredytu koszty ogólne zysk deweloperski Source: NBP based on Sekocenbud, REAS. Figure 39 Wrocław estimated structure of price per square meter of housing usable area in the PM (building type 1122-32 3/ building) for consumers. 7 6 5 4 3 2 1 ziemia + zagosp.terenu projekt koszty budowy koszt kredytu koszty ogólne zysk deweloperski Source: NBP based on Sekocenbud, REAS. Figure 4 Łódź estimated structure of price per square meter of housing usable area in the PM (building type 1122-32 3/ building) for consumers. 5 45 4 35 3 25 2 15 1 5 ziemia + zagosp.terenu projekt koszty budowy koszt kredytu koszty ogólne zysk deweloperski Source: NBP based on Sekocenbud, REAS. ziemia + zagosp.terenu projekt koszty budowy koszt kredytu koszty ogólne zysk deweloperski Source: NBP based on Sekocenbud, REAS. 17

1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 215 216 I 25 I 26 tys. zł I 25 I 26 I 25 I 26 mln zł mln zł lata Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 Figure 41 Economic indicators of an average DFD 5 45 4 35 3 25 2 15 1 5 Figure 42 Situation of an average DFD 14 12 1 8 6 4 2 7 6 5 4 3 2 1 bank ziemi mieszkania przychody koszty ogółem wynik netto projekty w toku bank ziemi w latach prod. (P oś) Note to Figures 41-43: DFD - a large developer employs over 5 persons according to GUS. More recent data not available. Source: NBP based on GUS (F1). Source: NBP based on GUS (F1). Figure 43 Costs of average DFD 24 99 12% Figure 44 Housing projects in progress, dwellings under construction and dwellings offered for sale in 7M 19 99 14 99 9 99 4 99-1 1% 8% 6% 4% 2% % 1, 8, 6, 4, 2,, -2, 25% 2% 15% 1% 5% -4, % zużycie materiałów i energii wynagrodzenia wsk.poz.kosztów (P oś) Source: NBP based on GUS (F1). Figure 45 Loans to corporations for real estate purchases (in PLN billion, left-hand scale) and the share of loans recognised as non-performing loans (in % right-hand scale) 6 5 4 3 2 1 Note: Data exclusive of BGK. usługi obce inne Kredyty na powierzchnię biurową Kredyty na nieruchomości mieszkaniowe Kredyty na nieruchomości pozostałe Wskaźnik kredytów zagrożonych na nieruchomości mieszkaniowe Wskaźnik kredytów zagrożonych na powierzchnię biurową Wskaźnik kredytów zagrożonych na pozostałe nieruchomości 5% 45% 4% 35% 3% 25% 2% 15% 1% 5% % Oferta na rynku M.gotowe w ofercie sprzedaży (p.oś) Projekty w toku (śr.ruch.3 okr.) Budowa mieszkań w toku (śr.ruch.3 okr.) Note: Projects in progress=permits for construction of dwellings less completed dwellings; dwellings under construction=dwellings whose construction started less completed dwellings; values divided by sale in a given period. Source: NBP based on GUS, REAS. Figure 46 Value of investment transactions (EUR billion) 5 4 3 2 1 Biura Handlowe Magazyny Pozostałe Source: Comparables.pl. 18

I 26 I 25 I 26 I 25 I 26 mieszkania w kwartale mieszkania w kwartale 214 215 216 217 214 215 216 217 214 215 216 217 I 25 I 26 mieszkania mieszkania w kwartale Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 5. Residential construction and the housing market in Poland s selected cities Figure 47 Structure of residential construction investors in Poland in the first quarters of the years 214-217 6 5 4 3 2 Figure 48 Completed dwellings in Poland, in quarteron-quarter terms 6 5 4 3 2 1 1 Source: GUS. oddane rozpoczęte pozwolenia przeznaczone na sprz. i wyn. indywidualne spółdzielcze pozostałe Figure 49 Dwellings under construction in Poland, in quarter-on-quarter terms 6 7 miast pozostała Polska Note to Figures 48-5: in violet colour only first quarters have been marked. Source: GUS. Figure 5 Issued building permits in Poland, in quarter-on-quarter terms 7 5 6 4 5 4 3 3 2 2 1 1 7 miast pozostała Polska 7 miast pozostała Polska Source: GUS Source: GUS Figure 51 Housing construction (thousand dwellings) and home construction indicator in Poland (dwellings under construction minus completed dwellings) 3 25 2 15 1 5 Mieszkania rozpoczęte Mieszkania oddane Pozwolenia na budowę mieszkań Wskaźnik koniunktury (p.oś) Wskaźnik projektów w toku (p.oś) Note: rolling averages for the last four quarters. Source: NBP based on PABB and GUS. 5 4 3 2 1-1 Figure 52 Number of dwellings put on the market, both sold and offered for sale in 6 largest markets* 6 5 4 3 2 1 wprowadzone w kwartale oferta na koniec kwartału sprzedane w kwartale *Warsaw, Kraków, Tricity Agglomeration of Gdańsk-Sopot- Gdynia, Wrocław, Poznań, Łódź. Source: REAS. 19

Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 Figure 53 Housing supply and estimated rate of return on housing investment in the PM in 7M 2 18 16 14 12 1 8 6 4 2 35% 3% 25% 2% 15% 1% 5% cena mieszk.t RP koszt bud.mieszk.+ziemia stopa zwrotu (P oś) 3 okr.śr.ruch.(mieszk.rozpoczęte(+15)) Source: NBP, GUS, REAS, Sekocenbud. Figure 54 Measure of adjustment of dwellings on offer to demand* in terms of area 5 sq. m, PM in Poland s selected cities 6% 4% 2% % -2% -4% -6% -8% Figure 55 Measure of adjustment of dwellings on offer to demand* in terms of area > 5 sq. m, PM in Poland s selected cities 35% 3% 25% 2% 15% 1% 5% % -5% -1% Warszawa 6M 1M Warszawa 6M 1M Note: Figure 54 presents, in percentage terms, a short-term mismatch in the primary market between supply (developers housing offer) and the estimated demand (housing transactions) in terms of the dwelling s size, according to the data from the BaRN database. The mismatch is calculated as the ratio of the share of housing units with usable area of up to 5 square meters offered for sale to the number of transactions involving housing units with a total area of up to 5 square meters (the average figure for the last four quarters). The positive result (above the black line) indicates a surplus of housing of this particular size, whereas the negative result indicates a shortage thereof. Figure 55 is parallel for the PM. Figures 56-57 are parallel, but they concern the SM only. Figure 56 Measure of adjustment of dwellings on offer to demand* in terms of area 5 sq. m, SM in selected cities % Figure 57 Measure of adjustment of dwellings on offer to demand* in terms of area > 5 sq. m, SM in selected cities 8% -1% -2% -3% -4% -5% -6% 7% 6% 5% 4% 3% 2% 1% % Warszawa 6M 1M Warszawa 6M 1M 2

II II II II II Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 Figure 58 Selling time of dwellings on offer in the PM in selected cities (number of quarters) 9 8 7 6 5 4 3 2 Figure 59 Selling time of housing units on offer in the SM in selected cities (number of quarters) 3, 2,5 2, 1,5 1,,5, Łódź Kraków Poznań Trójmiasto Warszawa Wrocław 6 rynków Note: selling time is the relation of the number of housing units on offer at the end of the current quarter in relation to the number of housing units sold in the last four quarters. Source: NBP based on REAS. Warszawa śr. 6M śr. 1M Note: real selling time, average of the last four quarters; data are not comparable with Figure 58. Selling time of housing in the secondary real estate market take into account only transactions ended with sale. The data are underestimated since they do not contain offers entered but not sold yet. 6. Housing policy Figure 6 Upper limits of prices per square meter of housing in the PM within thresholds set under the government-subsidised housing schemes in Poland s largest cities (in PLN) 1 9 8 7 6 5 4 3 2 Figure 61 Upper limits of prices per square meter of housing in the PM within thresholds set under the government-subsidised housing schemes in Poland s selected cities (in PLN) 1 9 8 7 6 5 4 3 2 Warszawa 6M 1M Warszawa Kraków Wrocław Poznań Gdańsk Łódź Notes to figures 6-65: red lines separate the period without government-subsidised housing schemes. Source: BGK. Source: BGK. 21

Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 Figure 62 Upper limits of prices per square meter of housing in the SM within thresholds set under the government-subsidised housing schemes in Poland s largest cities (in PLN) 1 9 8 7 6 5 4 3 2 Figure 63 Upper limits of prices per square meter of housing in the SM within thresholds set under the government-subsidised housing schemes in Poland s selected cities (in PLN) 1 9 8 7 6 5 4 3 2 Source: BGK. Warszawa 6M 1M Source: BGK. Warszawa Kraków Wrocław Poznań Gdańsk Łódź Figure 64 Gap in the limit of government-subsidised housing schemes as compared to the median of transaction price per square m of housing in the PM 4% 2% % -2% -4% -6% Figure 65 Gap in the limit of government-subsidized housing schemes as compared to the median of transaction price per square m of housing in the SM 6% 4% 2% % -2% -4% -6% Warszawa 6M 1M Warszawa 6M 1M Note to Figures 64-65: the gap is calculated as the difference of the maximum price (upper limit) in the RNS/MDM government subsidised housing scheme in the PM and SM in relation to the median of transaction price. The positive difference means that the scheme finances housing with prices exceeding the median, the negative difference means the opposite. Source: NBP, BGK. Source: NBP, BGK. Figure 66 Transactions involving dwellings, including those meeting the eligibility criteria for admission to the MDM housing scheme* in Gdańsk according to the BaRN database 16 Figure 67 Transactions involving dwellings, including those meeting the eligibility criteria for admission to the MDM housing scheme in Kraków according to the BaRN database 16 12 12 8 8 38,% 24,% 4 17,7% 4 8,3% 1 51 11 151 21 251 31 351 41 451 51 551 RP ceny RP limit RW ceny RW limit 1 11 21 31 41 51 61 71 81 RP ceny RP limit RW ceny RW limit 22

Information on home prices and the situation in the housing and commercial real estate market in Poland in 217 Q1 *Note to Figures 66-71: the share of dwellings in the PM and SM meeting the eligibility criteria of the MDM housing scheme in 217 Q2 have been calculated on the basis of transactions involving dwellings with an area below 75 sq. m. concluded in the period 216 Q2-217 Q1 according to BaRN. Figure 68 Transactions involving dwellings, including those meeting the eligibility criteria for admission to the MDM housing scheme in Łódź according to the BaRN database 8 Figure 69 Transactions involving dwellings, including those meeting the eligibility criteria for admission to the MDM housing scheme in Poznań according to the BaRN database 6 3,1% 4 51,2% 2 1 21 41 61 81 Figure 7 Transactions involving dwellings, including those meeting the eligibility criteria for admission to the MDM housing scheme in Warszawa according to the BaRN database 16 RP ceny RP limit RW ceny RW limit Figure 71Transactions involving dwellings, including those meeting the eligibility criteria for admission to the MDM housing scheme in Wrocław according to the BaRN database 16 12 12 8 15,7% 8 27,6% 4 7,6% 4 17,8% 1 51 11 151 21 251 31 351 41 451 51 551 RP ceny RP limit RW ceny RW limit RP ceny RP limit RW ceny RW limit 23