Real Estate /
Poland's apartment prices continue to fall [1844]
I've been enjoying this discussion for too long and couldn't resist giving my thoughts any longer.
To give some perspective, I purchased a new apartment in central Warsaw last year KNOWING it will likely drop in value, just a decision I decided to make after renting for so long; I just thought it was time to buy an apartment that I could finish and incorporate features you just won't find in 99.9% of the rental properties.
Regarding the press, even the negative articles seem to be overly optimistic. I espescially enjoy the articles about the so called 'luxury apartments' which is what they call the one I purchased. They definately are not a good investment, I could have rented the apartment I purchased for LESS than the interest I generated on the cash I used.
As interest rates rise, the number of vacant apartment rise, the 5 year period passes (related to taxation of sale of apartments), perpetual usufruct fees are increased (there are huge discrepencies in the rates paid between properties), 'new' apartments age and, god forbid, property taxes are introduced based on the market value of properties, the value of apartments will decrease.
There are of course positives, but I am confident that prices will fall (definately when inflation is considered, but likely ignoring inflation as well).
Do I care? A little, however as long as I am in Poland, if I sell the apartment I would expect to be able to buy a comperable apartment for the proceeds - therefore I would never 'realize' the loss (however wish I would have bought in 2004 when I started looking, although the apartment I bought at the time wasn't even designed yet).
Polsky/Milky will NEVER own anything however, as they have 'dream' expectations. Reality is if prices ever approached the amounts that they suggest the demand for apartments would absorb the apartments in the market.
Postings such as the below are ridiculous:
So about 1700 PLN/sq.m. will be te price at the end of 2011-2012
posted by polsky on Mar.02.2010
However I'm looking forward to the end of 2012 when we can reflect on this posting.
Ultimately I would say I support Polsky/Milky's views, however they are so unrealistic in their expectations they lose all credibility.
My suggestion would be rent, unless you find a 'perfect' apartment and have excess cash, then buy and make yourself happy if you are not concerned with the value dropping.
Now my question to all the posters, when you have cash, what should you do with it? There seem to be few, if any good investment alternatives in any currency, maybe someone would have a different view?