Market Report - RICS 2008 Poland Housing Review

A realy well put together review of the current state of Polish housing. Best report in English that I've seen with some great supporting data to back up their assessment.

RICS general sentiment seems pretty glum - "The sheer scale of recent price rises suggests there is now a high risk of price correction of substantially greater proportions than a soft landing"

rics.org/Newsroom/Economiccommentary/ehr2008.html

(download "Chapter 12 - Poland")

Thanks for the link. Looks interesting and quite helpful information too!

:)

hi - great post - thanks.
I wouldn't pay RICS a great deal of attention - they were trying to tell everyone in the UK in August that UK house prices were not going to fall and that everything was lovely. their data is completely different from that of RedNet or Mamdom and they seem to suggest that prices of new appartments in Warsaw have been falling since mid 2006. they have a vested interest in propping up the UK market so if they can suggest that the only safe place to invest is in the UK, they will do that without hesitation.

having said that house prices will stay stagnant in Poland for at least a year, new build prices will fall and prices of existing concrete blocks pre 1970 may fall too and small developers will go bankrupt this year

I used to think that but experience has proved just the opposite. RICS do know what they are talking about and quite frankly, these are the guys who write the survey reports out for the lenders, who in turn decide how much they will lend you based on the RICS members reports. A buyer ignores their reports with peril lol.

I'd further suggest your experience of the Property market is not as extensive as the combined knowledge of RICS in total ! Their information is first hand ! It's a fool who ignores their advice.

But as the saying goes, a fool and their money are soon parted. Investment in property requires a gread deal of homework and even more caution and a lot of independent professional advice from sources you can trust.

:)

I'm somewhere in the middle on this. The RICS report is backed up by a lot of data, and it does a thorough job of covering all of the key inputs and influences on the market. I haven't come across a better assessment in English. Combine this with the RedNet Reports, Szybko Reports, independent advice, and current macroeconomic data (see recent concerns from central bank about strengthening zloty) and develop your own opinions. Do your own homework!

RICS is a well respected institution and I don't believe that the report is biased one way or another. However, forecasting housing markets is not an easy thing. So much of it is driven by sentiment, not rationality, and as property is not nearly as fluid as bonds or equities these sentiments take a long time to work through. As the RICS report pointed out, market psychology led many people to continue to buy as prices seemed they would go up forever. The same could happen in reverse due to the high number of foreign speculators on the market, who are not just speculating on Polish property but also the zloty.

I think alligator_s is spot on. Falling prices for the next year or so on new builds, a stand-off in the secondary market with sellers reluctant to accept the new math, and a lot of small developers will go under. And perhaps a few opportunities on deals from nervous investors cashing in on the zloty, especially if the central bank ends the rate hikes.

Another read from the Polish side of things: warsawvoice.pl/view/17325

already happening. there is one developer in a small city i wont name that has built so many developments that there is an excess of 500+ flats unsold. he is in debt, still building and has had to significantly slash his sqm price on new builds.

oh well

lol, interesting, how do 38 million poles feel when they have to hear the future of there real estate by some foreign owned company, these companies are low lifes who manipulate data to suit there own greedy needs.

you may be right and I thank you for your advice and agree that it is a good idea to research before buying a property I would have never thought of that, thanks for pointing that out.

I find it interesting that the prices in Warsaw declined significantly according to RICS when ALL other sources of information on the Polish market list the opposite.

Lol ! I expect I could have worded my previous response to you a bit better. But the advice holds good for the majority of 'newbies' in the market. Otherwise, they can read various threads and think it's so easy just to invest in bricks and mortar, whereas it's such a minefield really !

I have found with RICS that what they may say may not be immediately apparent and leads one to think they do not know what they are talking about. But they have nearly always proved to be correct in their assumptions whether it be a survery or in market conditions. I was referring to the UK market when I wrote before. Obviously seasoned investors in Polish property, will have wider knowledge. I'm not saying RICS are perfect but they are the people who guide the lenders in what they will lend for a certain property and a selling price is not the same as a Surveyors price !

:)

I'm not so sure that you are interpreting the graph correctly. It is strictly mapping the acceleration of asking prices , by developers, on new-build apartments in Krakow and Warsaw. They appear to only have one reading for each year. In 2006 it was Q2, and in 2007 Q3. So the chart shows that between July 2006 and October 2007, the asking price on off plan apartments in Warsaw declined by about 15% points (53-28 points).

As RICS stated, the quality and quantity of data that they have to work from is poor. The 15 month spread is no help either, as it does not show when prices started to decelerate.

I haven't seen anyone else with comparable data. What I have seen from Szybko and Rednet is data on the Selling Price of the primary and secondary markets, which is not an accurate snapshot of the market. For example, if I bought an offplan apartment in 2006 in Warsaw for 6500zl/m2, the final contract would be signed in mid 2007. This distorts the data, as there is no way in mid 2007 you could buy something comparable at 6500zl/m2, but Rednet and Szybko would let the 6500zl/m2 influence their Q2 2007 numbers.

It is arguable if measuring the market by looking at asking prices is any better, but it is a different way of looking at the market, and is just another way for an interested investor to get a handle on what is happening.

Perhaps I am reading the RICS data wrong, but it seems that it could not be too far off target. I wonder if it is inflation adjusted as well?

Its a good point. Surveys are still fairly rare and those which use RICS members even fewer so the sample size is small. There is a good chance that this could be why their analysis goes against everyone elses. But in the UK they are very good.

That said I am buying again this year. People always point at the dips in historical prices and say "Wouldn't it have been great if we bought then when the market went down". Well here it is folks - dive in! - it won't last forever!

As soon as people stop flapping and the banks start moving we are going to see alot of pent up demand - buyers who were on the market haven't gone away, they have just got scared. To me it simply means profit time.

I have a keen interest in Poland, I have property there and in Bulgaria too. I have been dealing with a number of institutional investors, bankers and real estate agencies regarding certain projects. The current thinking is that central and Eastern Europe is likely to remain largely unaffected by the credit issues hitting the USA and UK. It is also likely that future investments will come from new sources like Russia. Have a look at this report..................interesting reading

knightfrank.com/ResearchReportDirPhase2/11058.pdf

Have a look at this report..................interesting reading

Neil, my friend this is a report written by the Irish, lol, the Irish are a stupid nation, they are now facing there own recession and Poles are leaving that country in droves, if you read the report and check its accuracy you will know what I mean,

Neil the Irish should do what they do best that is tell Irish jokes, which reminds me, ha, A Irishman went to a hotel every day and ordered two beers, the barman after a while questioned the man as to why he ordered two beers. The Irishman replied and said, look one is for me and one is for my brother, this went on for a while till one day the Irishman only ordered only one beer, the barman felt so sorry thinking that the Irishman's brother had passed away, he asked the Irishman as to what happened that he only ordered one beer, to which the Irishman replied with great confidence, I've given up drinking but this ones on my brother. lol.

Er, RedNet and Mamdom make money from people selling apartments. You think that they are ever really going to say "The market is f*cked, don't buy a flat"?

Good point. Has anyone else noticed that RedNet have yet to release a Market Report for April 2008? They've been pretty reliable on these things month-on-month for some time.

If their numbers for April are particularly bad, it would be in their best interest to just not issue a report. RedNet and their friends at Property Secrets have brought a lot of speculators into the market who are still locked up in offplan deals that have yet to complete.

We'll have to wait and see. I don't know of anyone else issuing monthly market reports in Poland. Anyone?

I have also read thousands of such, but with the still existing deficit of thousands of flats it wont go down. I work for a real estate agency and had met with many of developers, all the buildings which are to be completed in lets say 6 months, almost all apartments are sold. Even for Angel City which is a pretty expensive development in the center of Krakow.

Don't know of any other monthly reports, but Szybko.pl / Expander issue quite a detailed quarterly report in Polish on the state of the secondary market in Poland, including rental prices as well.

The update for the 1st quarter of 2008 can be found here: szybko.pl/nieruchomosci/raport_nieruchomosci_K1R2008


Sorry, I can't say I agree with you on this point. I was working at a fair in Krakow on the weekend. Not only was it pretty quiet and the buyers very price/location sensitive, but many large developers have well progressed developments in which there are lots of apartments remaining for sale. Regarding Angel Plaza, well that was pretty much sold out 1 year ago, at the peak of the market.

A better example would be 'Garden Residence', a huge new off plan development in Krakow's Zabłocie region. They started marketing the 700 apartments around one year ago. The Greek developer has spent shedloads of money on marketing, and I was told that as of recently they had sold only 56 apartments out of 700. Whilst I can't confirm the veracity of this information, it wouldn't surprise me. Also, I notice from seeing the building site last week that no works have got underway yet...

Interfax News Agency publishes a weekly one that covers the Eastern and Central European property markets:

interfax.pl/content/downloads/Real%20Estate%20Report%20March%2017%2020 08.pdf

Its obvious the prices are out of the range of people who would be interested in living in a block type of environments, most Poles just cannot wait to live in single house type of living. The ones who have money are building mansions and the ones who are smart with a little money are buying a block of land and building there own home.

Most people were sucked into investing in apartments, sounded OK at the time but now with higher interest rates and a uncertain global market, things have changed.

Just take a look at the clearance rate of apartments on various real estate sites, nothing is moving..check it out!

andy b/ LondonChick, Thanks for the links.

The Interfax Real Estate rerport is handy, but a subscription is £595 Annual. Take a look at the REAS Market Review reports (monthly /quarterly / city based). Most are free and very good. reas.pl/publications.html


Please see yesterdays WBJ article: "Decelerating Demand - Poland's residential market has entered a period of relative stabilization after three years of rapid growth. The supply of new homes has outpaced demand, making it unlikely that the market will see new home prices accelerate again in the near future"

wbj.pl/?command=article&id=41232&type=lim

And take a look at the late REAS Q1/2008 report which predicts a growing supply of exposed units on the market and a growing supply of completed yet unsold units well into 2009

I know people who've worked there - they really don't mind you asking for a trial subscription for a coupel of weeks.

as a investor in poland I am sure that land prices will continue to rise.
flat prices will slowly decrease.

this would indeed mirror the move from major cities out to the suburbs pushing up the price of suburban land. furthermore as foreigners become able to buy agricultural land in Poland then the prices will increase

Something interesting to read: oferty.net/artykul,2843,Raport-z-rynku-nieruchomosci---maj- 2008

Newman, a Chara, (that's Irish by the way) I suggest you learn to spell and study the basic grammar and syntax of the English language before you cast aspersions upon the Irish.