Real Estate /
Poland's apartment prices continue to fall [1844]
Well, financial blogs like calculatedrisk claimed that one of the very important propeller in the entire process was inflated appraisals. In order to gave inflated mortgage banks needed inflated apraisals to claim they have proper collateral for a mortgage. Because thanks to securitiazation process banks bore no risk and had unlimited amount of cash their goal was to inflate a price. Appraisers were in general dependent on banks and entire process corrupted leading to a bubble. And there was no point to bargain becasue "house prices never fall". Of course there were more propellers, and overall mechanics of this process is quite interesting, but that is probably OT here. It was greed of course, but greed is a constant property of reality. The interesting thing is what was the canals that greed used to get out of the bottle.
How do we know that a price reflects the market price? Well ,sellers , landlords , property buyers and tenants just look at the other offers on a specific market, don't they?
Of course, and those offers are the effect of the average prices from transactions in time X in a given area. And it happens that in Poland we do negotiate the price. The only period we didn't were years of property boom in 2005-2008... Offer price is not a market price, especially currently. Look for reports from REAS and other for example. Transaction prices are lower than offer prices at least a few percent, in certain caseses even more. To not bargain/negotiate the price especially when the market is falling is to act unwisely...
To make an example: there is a property in Wroclaw, a flat. In the last tender about half year ago city offered it for about 0,5 mln PLN. Nobody was interested. Now the offer price is under 0,4 mln PLN. (to all who claims that sky is falling, I would add that this flat needs a lot of work).