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15 reasons why the Polish real estate market will crash soon


Avalon 4 | 1,068  
24 Nov 2009 /  #91
convex

so, you've got say a 47m2 apartment in wroclaw going for 319,000pln. That's fairly modest, not luxury, in a flat built in 1976 on the outskirts of town. With 20% down on a 20 year note, that gives us a monthly mortgage payment of around 1900pln a month on the low end. Mind you, that is with 70,000pln paid up front.

Built in 1976 and still priced at 6,750m2, is overpriced, agreed.

Gross average (not median) wages per month in Q3 09 is 3332/mo, which putting it into the calculator gives me 2064/mo net. Granted that's not household income,

Polish people do not usually buy apartments for single occupation.

It is difficult to see housing price increases to continue without real median wage increases.

Agreed, but only for existing housing stock. Developers will not build new unless they can make a profit.

The government is doing a great job keeping the zloty low and stimulating growth and FDI while controlling inflation.

Agreed.

It seems to be happening in Slovakia at the moment after the adoption of the euro. Slovaks quickly found that they had way more purchasing power, but then they got bit by the exodus of manufacturing jobs

That explains why they cross the border every weekend to do their shopping in Poland where it is cheaper. Since adopting the Euro, their prices have increased by 15%.

Gradual correction of overvaluation is not a bad thing. Weak speculators will be killed off for making unsound investments.

Agreed and hopefully this will happen.

I'll do it again if government steps in to prop up housing prices (drop those rates!).

The government could do this at a stroke of a pen, simply abolish VAT on all new housing as in the UK. Loss of any VAT would be recouped many times over by the taxes paid by jobs created, investment would be stimulated and the money would be spent in Poland.
SeanBM 35 | 5,808  
24 Nov 2009 /  #92
At the height of 2007 the value of the house rose substantially but this year if I sold, I would have to accept a lower price, but, it would still exceed what I paid.

I am in the same boat, although it would not be much more than what I paid originally.
Which in todays market is as good as it gets.

"the prices will rise because the building materials are more expensive"

Building materials have not risen in price.

I still don't know why homes are so expensive in Poland especially country areas.

You have posted before that the average house in Poland is 1 million PLN, that is over double the price, perhaps that is why you think houses are so expensive?

Hello Covex,

And welcome to the Polish forums.

Just a few things on your post, you take a random flat in Wrocław and the median wage from all over Poland. Perhaps an average wage from Wrocław with a flat in Wrocław would be a better indicator?

(average price per M2)

From here Open Finance
open.pl/news/wieksze_mieszkanie_za_srednia_pensje.html

With 20% down on a 20 year note

Why not a 30 year mortgage? it seems to be the standard here.

It is difficult to see housing price increases to continue without real median wage increases.

Good point, I doubt house prices will increase, the days of buying an apartment and sitting on it a few years are gone. It is a more steady market driven by locals, which is more sustainable than the likes of all the foreign investments on apartments in Bulgaria (a false bubble).

I think this levelling off in the market is necessary for Poland, if it had continued the way it was, we would surely have the same difficulties a lot of other countries are suffering now. The prices for an average apartment is affordable to the average household.

which will obviously affect property prices.

Good point.

And nice have your contribution as it is more balanced.
Wroclaw Boy  
24 Nov 2009 /  #93
I still don't know why homes are so expensive in Poland especially country areas.

Thats not true, i know of many country houses for less than 100,000 PLN, typical example would be four rooms (three bed) with around 5000 m2 of land and a few barns.
Avalon 4 | 1,068  
24 Nov 2009 /  #94
Well said WB, but the Polish mentality is to live in the towns or cities. It is not fashionable to live a 10 minute ride out in the country, too much trouble to drive into town, and yet, on Sundays, they will drive around all day using up petrol.

Have you noticed how Polish drivers park right outside of the doors of supermarkets/shops, ignoring the parking bays because that would involve a 10mtr walk to the entrance...lol...or, they park across the back of you when you are in a marked bay, blocking you in, because they think they will be out quicker than you.
SpecialPolak  
25 Nov 2009 /  #95
remember the whole mafia associated with real estate in Poland will never admit prices of homes are dropping

first the mafia need to sell out everything, and they have lots of properties... they need to sell out at these overinflated prices of 5 - 9 000 pln / sq.m.

and they are using all the lies and manipulations to make sure they sell their properties at this bubble overinflated prices
andy b 4 | 156  
25 Nov 2009 /  #96
Have you considered visiting a doctor to help with your mental condition? Your stupid posts are getting really tiresome!
Kowalski2007  
30 Nov 2009 /  #97
Szczecin has already hit the 600 eur/sq.m. in the very CENTER and still continues to go down. It is absolutely normal for a city with average monthly salary of 350 euro.

In Krakow average salary is maybe around 450 euros/month, so probably 800 euros/sq.m. will be hit next year, and 450 euros/sq.m. in 2011.
Avalon 4 | 1,068  
30 Nov 2009 /  #98
Admin, you cannot educate pork. If you are going to allow this continual spamming, I will stay away from PF, its getting boring now. You cannot have a useful discussion when this idiot is allowed to keep using different names to spout garbage.
mbiernat 3 | 107  
30 Nov 2009 /  #99
I was at one of the many Real Estate developments in Krakow the other day. They quoted me at 11,000 pln per square meter. However, I work at an accounting firm that knows the real prices and they were offering the same flats in the center for under 7000 as in the newspaper. Further I teach some Real Estate agents that said the same flats are being sold for 4k and change.

So the whole thing about Krakow and Polish real Estate is it is the next Dubai. Everyone knows it. I hope they keep building like crazy. I really do. I do not care. I hope there are blocks of flats on every corner, the ones on my street have been empty for almost 3 years now and no buyers.

I will move to the country side and build a house for about 150,000 pln as one of my friends just did. And its a nice house, rather than live in a block of flats for a million.

Ps Avalon the reason is the admin can see the people posting to this forum have different IP adresses etc,your just a typical angry name calling person who should leave the forum. But do not have the courage of your convictions so will keep on posting. You are just talk and a name caller and bearing false witness.

Krakow is the Dubai of real estate and I think it is very funny.
Avalon 4 | 1,068  
1 Dec 2009 /  #100
I work at an accounting firm

As a cleaner?

Further I teach some Real Estate agents that said the same flats are being sold for 4k and change.

Even if flat prices dropped to this level (and you have provided no proof or supplied any links to show this is so), its still 5 times higher than our knowledgeable friend

kowalski2007, also known as, Emil Kowalski, Claituslux, popw, Claritus sux, popwasser, Polsky, Specialpolak, special-Polak, Mcduff, Michaelas, Tadeausz2007, spimowitzss, has stated in their numerous, spamming, posts. I may be name calling, but, I am not name changing.

You are just talk and a name caller and bearing false witness.

Exactly my point, numbnuts.
andy b 4 | 156  
1 Dec 2009 /  #101
You cannot have a useful discussion when this idiot is allowed to keep using different names to spout garbage.

Avalon, I couldn't agree more. What a waste of time this section of the forum has become because of this idiot.

I was at one of the many Real Estate developments in Krakow the other day.

This is complete rubbish.
Avalon 4 | 1,068  
1 Dec 2009 /  #102
This is complete rubbish.

Hey Andy, do you notice that whenever you ask these people to provide proof of their statements, they never answer?, they just leave it a few days and then come back with more unsubstantiated comments. It must be a Polish trait, if in doubt, lie.
Kowalski2007  
1 Dec 2009 /  #103
I hope they keep building like crazy. I really do.

Yes, and when the developers have no buyers anymore, what else to do than to roam on this forum, create multiple usernames (Avalon = andy b = etc) and say that all 99% of people who say the real estate prices are going down and collapsing in Krakow are all just "spammers" blablablabla

Truth is that Krakow is the next DUBAI. The only difference is that when Krakow will crash, noone will really care.
Claritus Sux  
1 Dec 2009 /  #104
also known as,...Claritus sux,

Avalon, there is some confusion. I most certainly do not belong in that collection of aliases. I am the poster that first pointed out some time ago that all of these aliases were the work of one person. From my post 1 month ago "Ahhhh, Mr. Biernat has played you all for fools. mbiernat, Clarituslux, polsky, michaelas, Tadeusz2007, popw, etc, etc, etc. They are all the work of the same person. His name is Mark Biernat and he has been lurking around on PolishForums for some time."

Try Googling these four words: google removed mark biernat

This is what he does for a living. He makes money when people visit his websites. His problem is that he has been excluded by all of the major search engines. It's a game of cat and mouse. Right now the best thing he has going for him is to post inflammatory remarks on forums in the hope of driving traffic to his website. The more he yanks your chain the more traffic goes to his websites.

What a waste of time this section of the forum has become because of this idiot.

Why don't the mods just delete this whole thread rather than allow one individual to hijack what was once a very useful forum, all for personal financial gain.
Kowalski2007  
1 Dec 2009 /  #105
Yes, sure , all developers would like this thread to be removed, so they can continue to sell to naive airheads at the overinflated 9k PLN prices.

There are no links to any mbernart website, no traffic is going to no mbernart, cut the BS, just accept the reality finally... prices are crashing in whole Poland, and still noone is buying, so prices are crashing even more down
Wroclaw Boy  
1 Dec 2009 /  #106
Krakow is the Dubai of real estate and I think it is very funny.

I think its even funnier that youve been living in Krakow for 6 years and still didnt buy a property. You missed the boat Pall - big time..

if you had bought in 2003/4 just think how much equity you would be sitting on right now, must make you sick.
mbiernat 3 | 107  
2 Dec 2009 /  #107
They are afraid of the truth that real estate in Poland is the next Dubai. It is already happening.
Please stop stalking. Stick to the issue at hand.

However, if you guys that are stalking focus on the issue then attacking others I will respect that.

The issue is the Polish market is, and has already been falling. I can take pictures around my town that has been empty for many years. These are new constructions, finished at the top of the boom a few years ago.

In US cities people started to move out of the city centers as most people prefer green country side to raise their family, again my friend build a 220 meter house in the country for 150.000 pln. Why would you pay 700.000 for a small block in the city?

The thing is the people in the Polish Real estate market in my experience have not been straight with me, if they tell me they are selling things for 11k a meter and my friends tell me that people have bought the same units for 4 k. Maybe something is wrong there, but I do not trust people in the RE market in Poland.

I think when it is at 1500 pln a meter it will be normal, maybe 2000 pln. Some houses in the USA are 800 pln a meter, houses in major cities like Miami, LA and Las Vegas.
Avalon 4 | 1,068  
2 Dec 2009 /  #108
Construction
latest reports
Construction sector in Poland, H2 2009 Comparative regional analysis and development forecasts for 2009-2012

2009-11-25

Signs of recovery on housing market

Business has been much brisker on Poland's resale market in recent weeks. Banks have been offering promotions on mortgages and terms are overall more attractive than a few months ago, according to a report compiled by the firm Expander and the web service szybko.pl.

In October 2009 prices in seven cities in which the average topped PLN 5,500/m² (€1,325/m²) slipped by 0.4%. Property values declined the most in Katowice during this period, slipping by 1.5%. On the other hand, prices only increased in Poznan (1%) and Gdynia (0.1%). Construction plots were also cheaper - prices fell the most in Warsaw (-15.2%), Krakow (-5.6%), Poznan (-4.8%) and Wroclaw (-3.4%).

In November this year the average margin on zloty-denominated mortgages fell for the first time since March. It currently stands at 2.6%, as compared with 2.8% for the last seven months. The terms for euro-denominated mortgages have also improved – the average margin has been cut from 3.5 to 3.35%, and the average interest rate has declined from 4.49 to 4.15%.

End of story.

You can delete the these facts admin, there is no discussion here, just multiple posts from a very sad person, which, you seem to encourage.
Wroclaw Boy  
2 Dec 2009 /  #109
However, if you guys that are stalking focus on the issue then attacking others I will respect that.

we do and have, unfortunately you keep popping back up under other screen names banging the same drum.

They are afraid of the truth that real estate in Poland is the next Dubai.

I dont really care if it is the next Dubai, i bought and sold and made money. The issue here is that I and a few others disagree with you. Plain and simple.

Dubai was a failure before it even began, i was offered apartments there back in 2004, they were cheap as chips, but i thought to myself who the hell wants to live in Dubai. True enough that forecast has come true now. They thought it would be the next Monte Carlo, not in an Arab country im afraid.
mbiernat 3 | 107  
2 Dec 2009 /  #110
Prove it that I change screen names. I do not. You bear false witness.

The issue is not about if you or I personally made money from the real estate boom, it is about where the prices are going. I am happy you are boasting and bragging to others how smart you are by the fortune you made but that is not the issue. I do not like people who brag about such things it is very distasteful and primitive.

The issue is this. They have been dropping for two years almost as they are over valued based on 1) cost 2) income 3) over supply. 4) tight credit

In the USA the trend was has been to leave the city centers as people have cars. Poland people are buying cars and going to the countryside. My friends are building cheap houses in the countryside.

Luxury apartments are nothing more than blocks of flats for fools. I personally think living in a block stinks. I have lived in a block and its awful. I do not care what the price concrete and having 50 or 100 units in a building is no way to live, that is why the trend is to move out of the city.

The population is not increasing fast, maybe even declining in the long term. But supply is increasing.
This is why this is the next Dubai, prices are not at equilibrium and have diverted from long term marginal pricing. Marginal price should equal marginal cost.
Wroclaw Boy  
2 Dec 2009 /  #111
I am happy you are boasting and bragging to others how smart you are by the fortune you made but that is not the issue.

Im not bragging and i didnt say fortune, i was stating a fact which proves i dont have underlying agendas in disagreeing with you which you have suggested previously.

I do not like people who brag about such things it is very distasteful and primitive.

As mentioned before i didnt brag and i dont care what you like or dislike. I dislike people droning on and on about the same point for months.

They have been dropping for two years almost as they are over valued based on 1) cost 2) income 3) over supply. 4) tight credit

Im not denying that, I agree that the market needs a shake up and that is exactly what is happening right now. Its good for the market it didnt take a genius to spot the market was way out of proportion from 2004 - 2008.

Poland people are buying cars and going to the countryside.

No there not many cant afford them, let alone the transport costs, i hear you thinking lets build houses for 150k. Thats not going to happen either as those prices are available only in fairy land.

Luxury apartments are nothing more than blocks of flats for fools.

Wrong again, luxury apartments are luxury apartments within luxury buildings some have gyms and swimming pools, what do you call them communist puddles for idiots?

I have lived in a block and its awful.

Judging by your posts, i can imagine what type of communist blocks you have lived in.

that is why the trend is to move out of the city.

But its not though.

But supply is increasing.

Builders will simply stop construction if the units are not selling, what kind of business man completes at a loss?

Marginal price should equal marginal cost.

Unless its state housing no developer will build for any less than 33% land, 33% costs, 33% profit. Thats the global standard, if that cannot be met within a stable market the development of new properties by private developers will mostly cease to a halt.
mbiernat 3 | 107  
2 Dec 2009 /  #112
You make many point, I will address the central one:

You say that if there is not sufficient aggregate demand to satiate aggregate supply, then builders will stop or gear down their plans and constructions.

However, Joseph Schumpeter clearly explained this process of boom and bust. -> Real estate( like unemployment) is a lagging economic indicator. The reason is the production process has a relatively long cycle. That is by the time the builder buys the land, gets the permits, breaks ground and finishes the project it is several years. Therefore, because of mis-expectations a bust is created. They can not stop production half way through.

Similarly in times of recovery you see rising unemployment as it takes a while before firms lay off.

However, the stock market is a leading economic indicator because it can adjust to aggregate supply and demand in an instant.

The housing market as long as I have seen it goes though cycles of boom and bust not only because of the production cycle but because it is a highly leveraged investment. Highly leveraged.

This is why the cycles are more dramatic than the capital markets.
Avalon 4 | 1,068  
2 Dec 2009 /  #113
Wroclaw Boy

He/she? is stating what he/she wants, it has nothing to do with anything that is factual, the reality of the situation is not acceptable to them so they live in a fantasy world where all the suppliers,give them everything at less than cost price.

This person will never have anything because they cannot comprehend, simple business practices such as profit and loss. There was such a system here around 20 years ago but I think it failed.
mbiernat 3 | 107  
2 Dec 2009 /  #114
Cost? What is cost? When did cost have anything to do with price? The communist theory of value was based on cost, it failed. An object's worth was a factor of labor cost and productivity.

However, Austrian economics clearly showed that price is determined is subjective, based on supply and demand irrespective of cost. This is why we have something called the diamonds water paradox. Why? Value is subjective. Hayek and Misses explained this clearly. Cost and price are not connected.

If you buy IBM stock for $100. Why would I as a buyer care about your cost? I will pay for it what I subjectively think it is worth. Even if you take a loss. Supply and demand.

You may say, well I will not sell it. Ok so if you really want to talk cost you have to talk economic cost not some builders cost. This is called opportunity cost. There is an implied cost to the holder of holding an unproductive asset. Further, liquidity constraints.

Therefore prices adjust to equilibrium as the capital expansion process can not be complete and aggregate supply exceeds aggregate demand.
Avalon 4 | 1,068  
2 Dec 2009 /  #115
Source WBJ. 30th November 2009

Poland’s highly anticipated first live real estate auction turned out to be something of a disappointment, with 19 of 27 properties left unsold. The event, organized by Colliers International together with auction houses Rick Levin & Associates and DESA Unicum, had been described as an attempt to fill a gap in the market.

Bidders were mostly interested in units from the Wiślane Ogrody and Dobrolin projects, developed by Star Investments and Dantex, respectively. Four apartments were sold from the former, and two apartments along with a commercial unit from the latter.

Although few properties sold, the auction was a success by other measures. It drew over 250 interested parties and all of properties moved at prices considerably below their market values. For instance, a unit in Wiślane Ogrody whose market price was over zł.7,000 per sqm sold instead for zł.4,900 per sqm. (NOT 1000 PLN)

You still don't get it do you?....developers will not sell new flats/apartments below cost unless they are going bankrupt, which, does not seem to be happening. We are not discussing "paper" shares, we are talking of "completed, finished, buildings".

19 of 27 properties never reached the reserve price and were not sold which means that the developers would rather keep them than sell at a loss.

Where is your crash?
Wroclaw Boy  
2 Dec 2009 /  #116
That is by the time the builder buys the land, gets the permits, breaks ground and finishes the project it is several years.

yes but they wont finish the projects if they cannot sell the units and credit has dried up. Many developers only have part finance in place prior to breaking ground, they rely on large deposits and stage payments from buyers. No buyers/deposits = no development = no over supply.

My statement was written in response to:

They have been dropping for two years almost as they are over valued based on 1) cost 2) income 3) over supply. 4) tight credit

The apartments that are completed and already on the market are insignificant compared to what actually is being built.

In any case the slump we are now seeing in Poland is not exclusive to this country, its a global issue.
Kowalski2007  
2 Dec 2009 /  #117
In any case the slump we are now seeing in Poland is not exclusive to this country, its a global issue.

And for sure, it is not the time now for a trends reversal, when real estate residential
projects are collapsing and going bankrupt at a higher rate than ever before...

see DUBAI WORLD for example...

For instance, a unit in Wiślane Ogrody whose market price was over zł.7,000 per sqm sold instead for zł.4,900 per sqm.

They will not sell below 4000 pln per sqm this year in krakow just because they dont want to scare all the buyers away and for everybody to see how the market prices

are FREE FALLING
Avalon 4 | 1,068  
2 Dec 2009 /  #118
"I think when it is at 1500 pln a meter it will be normal, maybe 2000 pln".

At that price, I will take 50 and pay you a finders fee of 5,000PLN per apartment.

How about you WB?......sounds like easy money to me.
SeanBM 35 | 5,808  
2 Dec 2009 /  #119
Put me down for as many as can be got :)

sounds like easy money to me.

Sounds like someone got hurt bad and is still spamming these forums.
mbiernat 3 | 107  
3 Dec 2009 /  #120
Talking specifics is good.

Wiślane Ogrody this is the place people in Krakow are now calling "The Bunker". I looked at "The Bunker" and it was empty, even thought the agent tried to tell me you have to buy now or all the apartments are going to be sold.

Yet, I herd the bank is already taking ownership of the bottom floor apartments directly from the real estate agent in the sales office. Maybe I misunderstood as I am not a native Polish speaker but I am pretty sure that they are not selling like hot cakes they will be discounted very steep.

However, after looking at "The Bunker" I have no desire to live there, even for 3000 pln a meter, when my friend finished a house in the countyside 220 meters for 150,000 pln (they did alot of work themselves.) So like many I know I have decided to move to the countryside.

The Bunker units are small concrete units, that are being sold "surowy" that is raw or unfinished. After you buy it you have to finish it, then pay a condo fee.

I think cost will not matter, if the banks take too many apartment's in Krakow as is the case in the USA. They will want to get them off their books. Not at first but with time.

I also think cost claims are inflated. And supply and demand is that determines price, not cost as explained above.

There was a massive investment in Dębniki, these were Luxury apartments. The builder was taking Polish people's money the week he went bankrupt. I do not know when those people will ever get their money back, however, the investment is not done and the people surely can not move it. The bank took it.

Now there are "komar" in Poland. Those are people auctioning off foreclosed investments at below cost.

I personally do not care either way at this point as I am moving either to the countryside or the States, maybe I will stay in Krakow, I guess I do not know. However, as I walk around Krakow I can not believe all the unfinished units that will come to market in the next year.

I guess I hope the price falls for all the Polish people making 2000 pln that can not afford it.

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