Current state of the property market in Krakow

Ok lets compare it to Philadelphia. In Philadelphia you can buy a house in a reasonable location in the city, with land in the back and front not far from the city center for 70,000 dollars or about 200,000 pln. The size of the house is almost 200 meters. I can send links. Poland is not Philadelphia, Florida, Boston yet. Its very nice but no way would I pay my life savings for some blocky 50 meter flat in Krakow when I could get beach front in Florida or Maine. Or Downtown USA.

Why? because you are there? that's not a good reason, we could compare Philadelphia to a million other places, it would not make sence or be constructive to the subject, wouldn't you agree?

Anyway, it is Sunday, i will wait until at least tomorrow to talk shop ;)

I am not debating that Poland will continue to grow and be stronger than ever, its the value of Real Estate will come down 50%. Just compare prices in the USA and Poland. Or even Poland in the city to the countryside. Only time will tell but I do not have 200000pln to drop for a down payment for a blocky flat.

perhaps it is due for a re-adjustment, where does the 50% figure come from?

officially- not yet ( two quarters ) in reallity yes.

You cant compare Polish property to American real estate at all. try comparing with, UK, Sweden, France, Spain.

Interesting point. My girfriends father recently built a house outside Krakow and tells me house prices have levelled out completely in the area which is somewhat heartening. It seems to suggest the housing sector in Poland may not reach such absurd highs as it did here in Ireland. Where do you reckon Poland are in their '10 yr cycle', year 5/6 maybe ?

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.

Stop, stop, stop! Just stop comparing the Polish market to anywhere. Its bananas and pointless. You can't even compare Krakow prices to Gdansk and say "oooooh, you can get so much more in Gdansk so Krakow is too expensive". They are different markets.

Why does a 50 sqm flat in Krakow cost 200,000?
- Big student population and young professionals so easy to rent
- Close to bars, shops, nightclubs, theatres, cinemas, culture, etc, etc.
- Poles migrating into the city for well paid jobs increasing demand while supply of housing is limited.
- Plenty of low cost airlines flying in millions of tourists
- On the main transit route from Germany/West Europe to Ukraine, Russia and other Eastern markets so plenty of business in logistics
- beautiful old town, castle and river within walking distance or tram trip of most suburbs
- Easy to reach and travel to the rest of Europe
- Close to mountains, forests, lakes

Why does a huge 200 sqm house with garden in Philadelphia cost the same?
- it doesn't have most of the above.

If its all about where you want to live and you prefer American suburbia then go live there and potter around in your garden. Personally I love big city lights so do the majority of people (demand) so I have to pay more because the number of properties in a city centre (supply) is limited. And that's also why I invest in or near cities.

I agree with this forecast.
I also think the lull is the best thing for Krakow (and the rest of Poland) so that prices do not get overly inflated like Ireland.

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

Ok Even without comparisions to other countires- I still think the fall will be driven by 1800 pln average in netto income in Poland -yet- very high per square meter price - 4000 to 10000 per square meter. That alone will bring a small decline. Credit freeze will bring a fall back to a level of affordability.

Fact!!

220sqm House anywhere in Krakow 2 yrs ago , would have cost you 750,000 - 800,00zl

Now same House will cost you 1.700,000

bring on the stupid tourist!!!..plain simple fact is that its the system of "valuation" coupled with the system of 1-3% paid to the estate agent.

the estate agent puts the value on the houses in Krakow,

talk about a conflict of interest.

1 sale of a house in krakow pays for all the office costs of running a Nieruchomosci busines for the whole yr.

its the estate agents in Krakow and the rest of poland that is to blame,

NOT supply and demand just plain ole' greed

asking someone to put a value on something that they are going to sell AND also get a comission on is plainly LUDICROUS !!.....

Independent valuations is the only system that could possibly save Poland housing stagnation..No ONE IS BUYING HERE!! FACT, not avaerage polas , and not average dummy tourists either

Ah they have :)


Credit cool refreshing breeze perhaps but not freeze.


True but you can still find a bargain with a little effort.


Agreed, I have worked with estate agents in several countries and they all expect to get something for opening the front door, very annoying.


I disagree with you on this one, well not on the tourist, the credit crunch is of course effecting them.
But Polish people are still buying.

I always dislike when people shout out "FACTS" even if they are sometimes true.
We are reasonable people, no need to shout :)

Saw this link posted elsewhere, interesting

nytimes.com/2008/10/27/business/worldbusiness/27poland.html ?_r=2&ref=world&oref=slogin&oref=slogin

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

The estate agents in Ireland are partly / significantly to blame for the ridiculous house prices here over the last few years. The reason I use Ireland as an analogy is because of the similarity between both economic models. Although of course it was the cosy relationship between the estate agents,banks,developers,media organisations and revenue from property advertising also. Estate agents in Ireland have little or no regulatory control over them and often 'gazumped' house prices etc

Yes but the banks are not giving credit in Poland either so the Polish buyers for off plan properties whether they represent 90% of the buyers or not will have to pay cash .Beeing nowhere near Recession does not change banks 'attitude nowadays so even if Poland is doing extremely well compared with Western Europe not everyone will have that much cash.

In short in my opinion the prices will decrease at least 15%.

But that's how they work in Britain....?


Independent valuers look at a property and then call estate agents to ask what similar properties have sold in the area. So the 'root' is actually the same. When I remortgage I give the surveyor comparables that I have already got from estate agents - works like a dream and they love not having to do so much work - but nothing independent about it.


But prices in Kensington (London) are quite unreasonable for the average Brit or European - luckily the average Brit doesn't buy in Kensington, the rich ones do!

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

is there a real estate agent on this site?

Yes, I am sure there are, why?

It sounds like you want to form a pose and lynch him/her :)

I wouldnt be so sure about that at all actually, you are a lot closer than you realise.


Oh no, prices have certainly doubled since 2004. I remember looking at property in Poland pre EU accession and prices have certainly more than doubled since then. They raised by almost 70% in 2006 alone.


Earlier falls in 2001/2002 arent relevant and in 2004 there was just a slight decline in the second part of the year due to supply outstripping demand.

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!

The reality is that the whole credit based property bubble which has occurred nearly everywhere over the past decade or so is over. The banks are no longer willing to finance the pyramid scheme and prices must therefore drop. Simple as. The credit crunch is not an aberration as many in the media would have you believe. It is actually a reversion to the mean. The real aberration were the unsound lending practices of the past 15 years. They are now gone and arent coming back.

Also, there is no such thing as a 10 year property "cycle" - despite what those within the industry may have us believe. Historically, over time property prices tend to match inflation. Bubbles follow identical patterns, be they in property, dotcoms, tulips or whatever. And make no mistake, what we are discussing is a bubble.

The era of self proclaimed property "investors" traversing the globe looking for "investement" opportunites are over. Many people have been left with a bleak indebted future. Some people got rich of course, but they are actually in the minority.

My advice to anyone still holding within the pyramid scheme is sell as quick as you can and get out now before its too late.

There are agents who want to list at the market price to get the house sold, but some sellers will list high with other agents (who just wannna get the listing) because they think their house will sell high. And when other sellers see their neighbors are listing high, they wanna list high. Not enough buyers inventory will increase and will overpower demand while these homes will sit on the market for months waiting for bust.

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.

Just to clarify, you quoted my quote of ash1972, I did not write that.

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.

Where did you get those figures from?
We are still talking about Krakow are we not?