The Popularity of Single-Family Housing in Real Estate Development Activity in the Light of the Pandemic – the Case Study of Łódź

Agata Antczak-Stępniak

Abstract


Theoretical background: The functioning of the entire housing market and the sale of developer dwellings depends on many factors. They are, e.g. economic and financial, institutional, environmental, cultural, and religious. Due to the complexity of the real estate market and the variety of factors that influence its functioning, the real estate market is characterized by high variability. Some external factors, especially those difficult to predict, may cause rapid changes in the size of this market. Epidemics can be such a factor. Recently, the COVID-19 pandemic has significantly impacted the functioning of many housing markets. Since we spent whole days at home with whole families, it soon turned out that the previous places of residence needed to be bigger, functional, and properly located. Therefore, in many places worldwide, the demand for single-family houses has increased, contributing to the growing sale of such developer projects. The pandemic, however, has passed, but its effects, along with the consequences of the war in Ukraine, also affect the standard of living of the population and real estate development activity, although it seems to be in a different way.

Purpose of the article: In connection with the above, two research objectives have been set in this article: to determine the impact of the pandemic on real estate development activity in the Polish housing market and to analyze, on the example of Łódź, whether the pandemic contributed to changes in developers’ offers and level of sale, especially in the context of single-family investments.

Research methods: In order to achieve the set goals, the desk research method was used. First, based on statistical data of the Local Data Bank situation on the primary residential real estate market was analyzed (in Łodź). Then, the number of investments implemented in Łódź, broken down into multi-family and single-family housing, was examined (based on data collected by the author from real estate portals and websites of individual developers). Concerning single-family housing, investment commencement, and completion dates were identified and finally, based on the starting dates, single-family investments were divided according to the level of sale.

Main findings: The outbreak of the COVID-19 pandemic has “turned on its head” housing markets in many parts of the world. Overnight, entire households switched to remote work or learning, which was difficult to reconcile, especially in small dwellings. Difficulties in functioning partly prompted and partly forced to look for other, more suitable places to live. Because of that, developer projects concerning single-family houses sold very well during the pandemic. However, it seems that the increase in popularity (sale) of single-family investments offered by developers was temporary. The increase in interest rates resulted in a decrease in demand for large dwellings, which few people can afford anymore, and they are not an attractive investment for investors. So, developers have frozen capital, which, unfortunately, with the loans taken out, may, in the long run, lead to the risk of debt growth and bankruptcy of smaller enterprises.


Keywords


real estate development activity; buyers preferences; COVID-19 pandemic; housing

Full Text:

PDF

References


Ahrend, R., Bétin, M., Caldas, M.P., Cournède, B., Diaz Ramirez, M., Pionnier, P.-A., Sanchez-Serra, D., Veneri, P., & Ziemann, V. (2022). Changes in the geography housing demand after the onset of COVID-19: First results from large metropolitan areas in 13 OECD countries. OECD Economics Department Working Papers No. 1713. doi:10.1787/9a99131f-en

Andersson, M., Kopsch, F., & Palm, P. (2019). How cultural values are reflected on the housing market – direct effects and the cultural spillover. International Journal of Housing Markets and Analysis, 12(3). doi:10.1108/IJHMA-02-2018-0016

Andrén, E. (2022). Impact of Covid-19 on housing preferences in Sweden. Master’s Thesis. Sweden: Uppsala University.

Antczak, A. (2012). Developers’ Activity in Selected Cities of Poland – a Comparative Analysis. Real Estate Management and Valuation, 21(1), 59–68. doi:10.2478/remav-2013-0008

Antczak-Stępniak, A. (2020). Location tendencies in developer investments in the residential market in Łódź. Bulletin of Geography. Socio-economic Series, 47(47), 133–144. doi:10.2478/bog-2020-0008

Antczak-Stępniak, A. (2022). The role of real estate development activity in the re-urbanization of cities – a case study of Łódź, Poland. Environmental & Socio-economic Studies, 10(4), 59–70. doi:10.2478/environ-2022-0024

Balemi, N., Füss, R., & Weigand, A. (2021). COVID-19’s impact on real estate markets: Review and outlook. Financial Markets and Portfolio Management, 35(4). doi:10.1007/s11408-021-00384-6

Batalha, M., Gonçalves, D., Peralta, S., & Pereira dos Santos, J. (2022). The virus that devastated tourism: The impact of covid-19 on the housing market. Regional Science and Urban Economics, 95, doi:10.1016/j.regsciurbeco.2022.103774

Berridge, J.D. (1971). The housing market and urban residential structure: a review. Research Paper, 51. Center of Urban and Community Studies. University of Toronto.

Bogołębska, J. (2019). Properties for sale in attractive holiday locations: The most important elements. Annales Universitatis Mariae Curie-Skłodowska, sectio H – Oeconomia, 53(4), 7–20. doi:10.17951/h.2019.53.4.7-20

Borowska-Beszta, B., Bartnikowska U., & Ćwirynkało K. (2017). Analiza wtórna jakościowych danych zastanych: przegląd założeń teoretycznych i aplikacji metodologicznych. Jakościowe Badania Pedagogiczne, 2(1), 5–24.

Bunel, M., Gorohouna, S., L’Horty, Y., Petit, P., & Ris, C. (2019). Ethnic discrimination in the rental housing market: An experiment in New Caledonia. International, Regional Science Review, 42(1), doi:10.1177/0160017617739065

Cheung, K.S., Yiu, Ch.Y., & Xiong, Ch. (2021). Housing market in the time of pandemic: A price gradient analysis from the COVID-19 epicentre in China. Journal of Risk and Financial Management, 14(3), doi:10.3390/jrfm14030108

Dąbrowski, M., & Kirejczyk, K. (2001). Inwestycje deweloperskie. Warszawa: Twigger.

Delgado, A., & Katafuchi, Y. (2020). COVID-19, state of emergency, and housing market. MPRA Paper No. 102475. Retrieved from https://mpra.ub.uni-muenchen.de/102475/1/MPRA_paper_102456.pdf

de Meirleir, M. (2012). Location, Location, Location: A Plant Location and Site Selection Guide. Routledge.

De Toro, P., Nocca, F., & Buglione, F. (2021). Real Estate Market Responses to the COVID-19 Crisis: Which Prospects for the Metropolitan Area of Naples (Italy)? Urban Science, 5(23). doi:10.3390/urbansci5010023

Duszyński, J., Afelt, A., Ochab-Marcinek, A., Owczuk, R., Pyrć, K., Rosińska, M., Rychard, A., & Smiatacz, T. (2020). Zrozumieć COVID-19. Academia, 4(64), doi:10.24425/academiaPAN.2020.136169

Ellis, L. (2008). The housing meltdown: Why did it happen in the United States? BIS Working Paper No. 259. Basel: Bank for International Settlements.

Feng, L., Lu, W., Hu, W., & Liu, K. (2010). Macroeconomic Factors and Housing Market Cycle: An empirical analysis using national and city level data in China. The Conference on Web Based Business Management. Scientific Research, 1088–1092.

Francke, M., & Korevaar, M. (2021). Housing markets in a pandemic: Evidence from historical outbreaks. Journal of Urban Economics, 123, doi:10.1016/j.jue.2021.103333

Gamber, W., Graham, J., & Yadav, A. (2021). Stuck at Home: Housing Demand During the COVID19 Pandemic. Journal of Housing Economics, 59, doi:10.1016/j.jhe.2022.101908

Gołąbeska, E. (2018). Sieć ryzyka inwestycyjnego na rynku nieruchomości. Białystok: Oficyna Wydawnicza Politechniki Białostockiej.

Guglielminetti, E., Loberto, M., Zevi, G., & Zizza, R. (2021). Living on my own: the impact of the Covid-19 pandemic on housing preferences. Questioni di Economia e Finanza Banca d’Italia, 627.

Gür, M. (2022). Post pandemic lifestyle changes and their interaction with resident behavior in housing and neighborhoods: Bursa, Turkey. Journal of Housing and the Built Environment, 37, doi:10.1007/s10901-021-09897-y

Hromada, E. (2021). Impacts of COVID-19 on the Real Estate Market in the Czech Republic. SHS Web of Conferences, 91. doi:10.1051/shsconf/20219101028

Hromada, E., Heralová, R.S., Cermáková, K., Piecha, M., & Kadeřábková, B. (2023). Impacts of Crisis on the Real Estate Market Depending on the Development of the Region. Buildings 13, 896. doi:10.3390/buildings13040896

Hutchison, N., & Disberry, A. (2015). Market forces or institutional factors: what hinders housing development on brownfield land? Journal of European Real Estate Research, 8(3). doi:10.1108/JERER-07-2015-0029

Jansen, S., Coolen, H.C.C.H., & Goetgeluk, R.W. (2011). The Measurement and Analysis of Housing Preference and Choice. London. Springer

Jovanović-Milenković, M., Đurković, A., Vučetić, D., & Drašković, B. (2020). The Impact of COVID-19 Pandemic on the Real Estate Market Development Projects. European Project Management Journal, 10(1), 36–49. doi:10.18485/epmj.2020.10.1.5

Kang, B.; Won, J., & Kim, E.J. (2021). COVID-19 Impact on Residential Preferences in the Early-Stage Outbreak in South Korea. International Journal of Environmental Research and Public Health, 18. doi:10.3390/ijerph182111207

Kiel, K.A., & Zabel, J.E. (2008). Location, Location, Location: The 3L Approach to House Price Determination. Journal of Housing Economics, 17(2). doi:10.1016/j.jhe.2007.12.002

Kocur-Bera, K. (2022). Impact of the COVID-19 Pandemic Era on Residential Property Features: Pilot Studies in Poland. International Journal of Environmental Research and Public Health, 19, 5665,. doi:10.3390/ijerph19095665

Krajnakova, E., Jegelaviciute, R., & Navickas, V. (2018). The Economic Factors Influence on Real Estate Market Development. Journal of Interdisciplinary Research, 8(2), 141–146.

Laskowska, E., & Torgomyan, S. (2016). The Role of Government in the Housing Market. Scientific Journal Warsaw University of Life Sciences – SGGW. Problems of World Agriculture, 16(4), 205–212.

Lepczyński, B., & Pisarewicz, P. (2022). The impact of war and pandemic crises on the sovereign creditworthiness and solvency. The position, role and decisions of international rating agencies. Annales Universitatis Mariae Curie-Skłodowska, sectio H – Oeconomia, 56(5), 149–170. doi:10.17951/h.2022.56.5.149-170

Liao, Y., Graff Zivin, J., & Panassie, Y. (2022). How Hurricanes Sweep Up Housing Markets: Evidence from Florida. Retrieved from https://ssrn.com/abstract=4103049; doi:10.2139/ssrn.4103049

LDB. (2023). Retrieved from https://bdl.stat.gov.pl/bdl/dane/podgrup/tablica

Makinde, O.O. (2013). Environmental Factors in Housing. Journal of Environment and Earth Science, 3(1), 86–98.

McKibbin, W.J., & Stoeckel, A. (2010). The Global Financial Crisis: Causes and Consequences. Asian Economic Papers, 9(1), 54–86, doi: 10.1162/asep.2010.9.1.54

Mohammed, J.K., Aliyu, A.A., Dzukogi, U.A., & Olawale, A.A. (2021). The Impact of COVID-19 on Housing Market: A Review of Emerging Literature. International Journal of Real Estate Studies, 15(2). doi:10.11113/intrest.v15n2.128

Morris, E.W., & Winter, M. (1975). A Theory of Family Housing Adjustment. Journal of Marriage and Family, 37(1). doi:10.2307/351032

Muhyi, M.M., & Adianto, J. (2021). Literature Review: The Effects of Covid-19 Pandemic-Driven Home Behavior in Housing Preference. Smart City, 1(1). doi:10.56940/sc.v1.i1.2

OCC. (2022). The Pandemic-Fueled Preference for Single-Family Homes May Endure. Office of the Comptroller of the Currency. On Point. Economic and Policy Insight from the OCC. January 25, 2022

Pagani, A., Fritz, L., Hansmann, R., Kaufmann, V., & Binder, C. (2021). How the first wave of COVID-19 in Switzerland affected residential preferences, Cities & Health. doi:10.1080/23748834.2021.1982231

Rahadi, R.A., Rahmawati, D., Fitrianda, S., & Handayani, A.P. (2021). Millenials Residential Preferences in Indonesia during the COVID-10 Pandemic. South East Asia Journal of Contemporary Business, Economics and Law, 24(2), 43–53.

Ramani, A., & Bloom, N. (2021). The donut effect: How COVID-19 shapes real estate. Stanford: Institute for Economic Policy Research.

Rynio, D. (2021). The primary market in housing and apartment developments in Poland’s six largest cities over the course of the COVID-19 pandemic. Biblioteka Regionalisty. Regional Journal, 21. doi:10.15611/br.2021.1.13

Stankowska, A., & Stankowska-Mazur, I. (2022). The Third Wave of COVID-19 versus the Residential Preferences in Poland: An Assessment of Economic Factors and Psychological Determinants. Sustainability, 14, 1339. doi:10.3390/su14031339

Szpunar, M. (2009). Internet w procesie gromadzenia danych o charakterze wtórnym. Studia Medioznawcze, 2(37), 139–149.

Śmietana, K., & Zagórska, E. (2009). Deweloper jako profesjonalny uczestnik rynku nieruchomości. In H. Henzel (Ed.), Strategie inwestowania na rynku nieruchomości (pp. 160–166). Katowice: Wyd. AE.

Thakor, A.V. (2015). The Financial Crisis of 2007–2009: Why Did It Happen and What Did We Learn? Review of Corporate Finance Studies, 4(2), 155–205. doi:10.1093/rcfs/cfv001

Związek Przedsiębiorczości i Pracodawców. (2021). Podsumowanie Lockdown-u w Polsce. Warszawa. Retrieved from https://zpp.net.pl/wp-content/uploads/2021/01/25.01.2021-Business-Paper-Podsumowanie-lockdownu-w-Polsce.pdf

Wei, F., & Zhao, L. (2022). The Effect of Flood Risk on Residential Land Prices. Land, 11, 1612. doi:10.3390/land11101612

WHO. (2019). Coronavirus disease 2019 (COVID-19). Situation Report – 94. Retrieved from https://apps.who.int/iris/handle/10665/331865

Zeng, S., & Yi, C. (2022). Impact of the COVID-19 pandemic on the housing market at the epicenter of the outbreak in China. SN Business & Economics, 2(6), 53. doi:10.1007/s43546-022-00225-2




DOI: http://dx.doi.org/10.17951/h.2023.57.4.7-22
Date of publication: 2023-12-23 17:34:02
Date of submission: 2023-04-01 20:43:32


Statistics


Total abstract view - 454
Downloads (from 2020-06-17) - PDF - 0

Indicators



Refbacks

  • There are currently no refbacks.


Copyright (c) 2023 Agata Antczak-Stępniak

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.