Real Estate / Current state of the property market in Krakow [135]

Early birds and all that.. :)

By the way do you recommend holding onto developments until completion? Do you tend to get the biggest price jump at that point?

Real Estate / Current state of the property market in Krakow [135]

300% growth is in fact quadrupling! Well done, BUT those guys must have got in pretty early - say 2000?

My flat in the Warsaw ghetto area (Platinum phase 1) was bought in Oct 2006. Not a bad time to buy particularly - if only if it had been start of '06!

It completes in Sep 2009 but I was actually planning on selling earlier to pay the 90% that I owe to Budimex for a flat in their Murano development (nr. Warsaw Old Town). In the long run I don't mind holding onto both though.

Real Estate / Current state of the property market in Krakow [135]

Yes, 85 to 90%. Ergo, PRICES HAVE NOT EVEN DOUBLED.

100% growth = DOUBLING, my friend.

Real Estate / Current state of the property market in Krakow [135]

No I'm talking about average growth rates for the whole of Poland

Real Estate / Current state of the property market in Krakow [135]

Average real estate price increases for Poland:

2004: -5 to -10%
2005: 28%
2006: 33%
2007: 15%
2008: 5% (est.)

I cannot see how these growth rates imply average prices DOUBLING between the start of 2004 and now.

Real Estate / Current state of the property market in Krakow [135]

Dat: the 'listing high to get clients' obsession only prevails during a roaring bull market. That's because the agents know they can shift anything and want the kudos of being able to get the best prices for their clients.

When the market is slower agents really need to do deals to survive; the commission will probably just cover costs and they haven't got time to waste with unrealistic sellers.

Deise07: even the risk free rate (money on deposit) normally gives you a spread over inflation so I'd be very surprised indeed if any other asset class actually gave you the inflation rate long term! There are some oddities in the world, true: Japan has been declining long term and property in Germany basically does nothing as Germany is not a home-owning culture (that's fundamental).

The fact remains that mortgage lending in Poland is minute compared to the West and Polish banks have been among the most conservative in the world, following the lead of responsible central bank policy. Add to this: strong economic growth, strong inward migration to cities and a clear undersupply of QUALITY properties.

Real Estate / Current state of the property market in Krakow [135]


The lower quality, poorly located developments will probably fall by about that much. The upper end properties were never aimed at people who'd be stumped by having to find a hefty deposit!

Real Estate / Current state of the property market in Krakow [135]

All good points Eleanor.

If agents put a price on a property and also get commission when it's sold they are motivated to put a realistic price on it - otherwise, no commission. At the moment agents in London will only do business with sellers who will price realistically, i.e. LOW

Real Estate / Current state of the property market in Krakow [135]

What about the first year (2004) of falling prices? Plus the earlier falls in 2001-2 (before joining the EU admittedly)

Real Estate / Current state of the property market in Krakow [135]

That's right, prices so far have not even doubled since EU accession.

Real Estate / Current state of the property market in Krakow [135]

Blue Enigma, the levelling out we're seeing now is perfectly in line with a primary city moving from the first to the second major growth phase. There's usually a lull in between. If you look at Prague and Bratislava, both of which are a couple of years ahead on the curve and now well into their second growth spurt, you'll see the basis for the argument. Although I think this paradigm only applies to (de facto) capitals as you need the sustained inward migration.

My personal view is that neither Warsaw (where I own a couple of apartments) nor Krakow will do very much for a year or so, and then we'll start seeing some good growth again, say 10-15%.

Yes, year 5/6 of the cycle is probably right for both W and K.

Real Estate / Current state of the property market in Krakow [135]

A few points before we get way off track:

1) Comparing Florida property to Polish city centre developments is clearly silly. A relevant comparison would be to Bulgarian ski resort or coastal property as the same factors apply: unlimited land for development, aggressive marketing to foreigners and no real local demand.

The big cities in Poland are experiencing population growth due to inward migration. Why inward migration? Because the cities are where the highly paid jobs are.

2) The fact that the average Pole can't afford a central Krakow development is neither here nor there. The average wage earning Brit hasn't a hope in hell of being able to buy a central London apartment. Downturn or not, prices in Manhattan aren't going to adjust to become affordable to the average Kentuckian.

3) True, property markets do move in roughly 10 year cycles, as we're seeing now in Ireland and the UK. Irish prices in particular went up a staggering 5 times in the 12 years up to 2007. But - 2008 is nowhere near the 10th year of the Polish growth cycle. In fact prices fell in 2004, and 2005 was the first post accession growth year. So the 10 year cycle principle doesn't really apply here.

4) Price increases are coming from healthy GDP growth (4-5 per cent) and not solely easing credit like the last 3 years of the UK's boom. Even the weakest of the new EU member states, Hungary, is nowhere near recession.

5) The market for off plan Polish property is, and always has been, 90% Polish. Compare that to coastal Bulgarian property where the market was basically 100% foreign.

Real Estate / Current state of the property market in Krakow [135]

Did this incredibly reliable source tell you the name of the lender that's about to go into administration?

Real Estate / Current state of the property market in Krakow [135]

Total mortgage lending in Poland is less than 10% of GDP as opposed to the UK's 100%. The UK is officially in recession yet economic growth in Poland is strongly positive. Even property in the UK is estimated to fall by about a third over the next couple of years - not 50%.

Inward migration into the larger Polish cities is high. Plus, Poles are returning home from the UK to avoid our recession. That goes for Ireland and other parts of W Europe too.

Do you really think prices falling by 50% in Poland has any connection with reality? For the lower quality/poorly located developments, there will be some price falls. For more desirable developments - not likely.