Why could apartment prices skyrocket? The key lies in data from the last 18 years

Real estate in Poland has for several years been described as a luxury good. Today, prices are already reaching record levels, and recent media reports of a twofold increase over the next decade have further fueled investors’ imagination. Only a closer analysis revealed, however, that the most electrifying forecasts were created… with the involvement of artificial intelligence. Many experts are therefore wondering whether such a scenario is based on rational premises. The answer is sought by Maciej Gołębiewski, a real estate market expert and creator of dobregonajmu.pl.

– If we want to honestly answer the question of how apartment prices may change by 2035, we must start with the foundation – with what has most strongly “driven” the Polish real estate market over the past dozen or so years. And here we immediately arrive at an absolutely key indicator that appears in all serious analyses: wages. Because how much we earn directly determines how many apartments we are able to buy, and therefore how much demand can realistically grow – emphasizes Maciej Gołębiewski.

Inseparable pair
The foundation of the entire analysis is the fact-based assumption that wage levels are closely linked to real estate prices. When we look at historical data, this is very clear. The Pearson correlation coefficient used to measure the strength of correlation stands in this case at 0.94–0.95 – meaning it reaches almost the highest possible value. Simply put: when wages rose, apartment prices rose as well. It worked the same way in reverse: when wage growth slowed down – the real estate market also lost momentum.

– This is a truly rare situation in the economy, when two completely different indicators move in tandem – says Maciej Gołębiewski – The relationship between wage levels and the price per square meter means that future housing purchase costs cannot be sensibly analyzed without first asking what the historical relationship between these two indicators has been – he adds.

A relationship that says it all

When we look at the historical pace of wage growth, we can clearly see that since 2006 average wages in Poland have been rising systematically by about 6.9% annually. Of course, there were certain extremes. In 2020–2024, wage dynamics were exceptionally high, around 12.2 percent, driven by inflation and external factors. During the same period, apartment prices were also changing.

– If we compare the average price per square meter in the seven largest Polish cities with the average wage, we will see that from 2006 to 2024 their ratio ranged between 1.6 and 1.8 – within this interval the market operated in more than two-thirds of all cases. This means that during that time one square meter of an apartment cost the equivalent of more than one and a half average monthly salaries. Of course, there were extreme moments. In 2007–2008 this ratio even rose to 3.0 – it was a period of exceptionally expensive apartments, driven by a price bubble after Poland joined the EU. But this anomaly quickly corrected itself, and from around 2011 the market stabilized at much more rational levels and has remained so to this day. This tells us that real estate “likes” a certain level of balance between prices and wages – notes Maciej Gołębiewski.

More or less probable scenarios

The mechanism is simple: wages grow at a stable pace, and apartment prices have for years moved in relation to them according to a very consistent proportion. It can therefore be assumed that this will also be the case in the next decade. But how do we know at what pace wages will grow? The Ministry of Finance comes to the rescue, stating in its forecasts a wage growth rate of 5.8 percent annually until 2035.

– Having this data, we can build a simple scenario matrix. In the rows, we enter possible wage growth rates – historical, anomalous, and those officially forecast – and in the columns, possible ratios of price per square meter to wages. This shows us all the combinations the market could potentially adopt – explains Maciej Gołębiewski. – In such a table, we would find absurd numbers – increases of 300, 400, or even 500%. But this is precisely where the real analysis begins, because those figures result from extreme, almost unrealistic scenarios that by definition should be rejected – he adds.

– When we therefore exclude these extremes, we are left with realistic variants based solely on the parameters that have most frequently repeated over the past dozen or so years. That is: wages growing by 5.8% annually, and the ratio of price per square meter to wages remaining within the 1.6–1.8 range. And it is precisely in this narrowed part of the matrix, which most strongly reflects how the Polish economy has behaved for years, that all calculations consistently land in one place: between an 80 and 100% increase in apartment prices by 2035 – the expert concludes.

This is not investment advice…

The coming decade may be governed by similar rules as the previous ones: wage dynamics will remain relatively stable, and the proportions between earnings and apartment prices will stay at levels that dominated for most of the past dozen or so years. Such a scenario would be the consequence of long-term, recurring relationships. Of course, on the condition that the relationship between wages and real estate prices remains similar to what it has been so far, and that wages grow in line with macroeconomic forecasts.

– A doubling of apartment prices by 2035 is neither predetermined nor guaranteed — no reliable analysis provides one hundred percent certainty. What I present is an orderly way of looking at numbers that form a logical, coherent direction. It is not a “because I think so” nor a forecast generated by an algorithm, but a set of arguments based on hard data and long-term relationships that have governed the market for years – emphasizes Maciej Gołębiewski. – It is natural that these conclusions will provoke different reactions. Some will consider them accurate, others will be convinced that the market will slow down or accelerate much more than the models suggest. And that is perfectly fine – that is precisely the point of the entire analysis: a substantive discussion based on data, not on emotions or wishful thinking – he concludes.