Real Estate /
Poland Housing prices in July 2010 [129]
convex
Do you think that real estate is still undervalued in Poland? Or that a 50% increase isn't speculative?
Its not for me to say whether any property is over or under valued, at the end of the day its the market that will dictate the price. A 50% increase would definitely be very speculative and not something I would like to see. A slow increase would stabilize the markets and allow for better planning.
You mentioned why it's so expensive to build, on the economic side of things, wages have gone up 50% over the last 10 years and is slowing down year by year to about the rate of inflation. Shouldn't housing prices follow suit? Quite a few new builds are still empty (at least here in Wroclaw).
I have read reports from the large developers that materials and labour costs have decreased by some 20% which has offset the cost of the reductions made on finished properties. Mortgages are still hard to come by and I would imagine that the vacant apartments in Wroclaw are priced above the limits that mortgage lenders feel comfortable with.
With regard to wage rises slowing down to inflation levels, I think that may be hard to achieve when the government has increased VAT and the utilities, gas, electric and water, are asking for 22% increases. If and I mean its a BIG if, the government wants to adopt the Euro, wages are going to have to increase to try and have a level playing field.
I am already planning my next project and I have allowed for a small increase in labour/materials, the selling price will remain the same as I am at the lower end of the market and any projects still have to be viable.
The interest/response to my last project over the past few months has been incredible and I feel very confident for the future. An added bit of information, 30% of the flats were sold to Polish couples who work in the UK, they are not moving in for some time and they originally come from this area.