Polish residential properties prices are continuing in an upward trend, but the market is showing signs of stabilization after a record-breaking price surge that lasted more than a year, a Thursday report from the online property portal Oferty.net shows.

"Despite the popular expectation, May did not bring a radical change of the trend on the secondary residential market," the company said. "The prices of apartments put up for sale in May, rose in all major Polish cities with the exception of Gdansk (down 1.9% [vs. April])."

Apartment prices sky-rocketed in 2006, jumping around 50% in that period. In May, the highest growth rates were seen in Poznan, where prices rose 5.7% versus April to PLN 6,265 per square meter. Over the past three months, the average prices there rose 25%.

The prices in Lodz also rose 3.7% in May and 20% over the past three months to PLN 4,701. The prices in Krakow rose 3.4% in May to PLN 8,295, while in Warsaw the average prices rose 1.9% to PLN 9,540 per square meter.

The market attributed the price growth to little supply of new apartments, a housing gap of more than 1 mln units, rising prices of construction materials, and a scarcity of construction workers, many of whom left Poland to other EU states that offer higher wages.

Analysts believe the main factor behind price growth in the most expensive locations was the thus-far unused credit capacity of Poles, which is slowly reaching its upper limits.

"Prices will continue to grow, but the growth will be more stable and more linked to inflation and wage growth than the increase of the prices of construction materials, labor, or the subjective opinion of sellers on the value of their property," Bankier.pl analyst Michal Macierzynski wrote in a comment Thursday.

Macierzynski also believes that the growth barrier will be the limit of the credit capacity of Poles.

"The prices of apartments will not be strongly influenced by the rising prices of construction materials and labor. Developers would like to transfer those costs onto buyers, but the latter are limited with their credit capacity," he said. "The effect is the lack of fresh cash inflows to the market and the stop of price growth in locations where prices are already high.

"Further growth is possible only if credit capacities go up," he said.