Buying a flat in Krakow; prices are still falling?

Hi,

I moved to Krakow a year ago with my wife and am considering buying a flat in
the old town. Now I've been watching the market for almost 6 months and it seems
prices are still falling? Many of the properties I've looked at are still being advertised
and some have been discounted. There's obviously not much activity.
I've been told (by agents) that in Krakow the offer price is on average
10% of the asking price on the secondary market. I would be interested in getting a reliable opinion on this.

Thanks!

Prices have been relatively stable in Krakow for the past year, after falling 20-30% from the peak in mid-2007. For the past few years, it was possible to observe a kind of stand-off in the market, with a big gap between expectations of buyers and sellers. In recent months, we can see this gap getting smaller, and so more transactions are now beginning to happen.

One of the biggest problems in Krakow is the unrealistic price expectations of owners who want to sell. Many of them won't accept that the true market price is actually much lower than the price they think it is worth - this is made worse by many agents agreeing with the higher prices of owners. Why they do this is a mystery, as they can't sell these overpriced flats and hence won't make any money from the sale.

It looks to me like more owners are willing to accept the 'market price' now, and that is the reason why the levels of transactions are beginning to rise. Buyers are also finding it easier to raise mortgage finance now than in the last few years, and many that have been on the sidelines for the past few years can now see that prices have stopped falling.

Another positive for buyers is the larger stock of mainly new apartments, which can be bought either from the developer or on the secondary market. Whereas a few years ago, buyers had to take the risk of buying off-plan and hoping the developer would deliver, it is currently possible to choose from a lot of new apartments which are ready for delivery - buyers can see exactly what they are getting, which is a big advantage. I believe this excess stock will have largely disappeared come the end of 2010 and the beginning of 2011, and many new developments have been started this year by developers, which won't be ready until late 2011 or early 2012 - so if you don't buy this year, you will probably have to buy new apartments off-plan again next year.

At present, pretty much all offer prices, whether the property is new or second-hand, are negotiable, at least by 5% and sometimes by more than 10%

Hi,

What about Warsaw prices, have they been falling also
or can you recommend a web-link for more info about
apartments in warsaw

Many Thanks

How about renting? Is it possible to negotiate successfully on the price of an apartment per month? I am currently looking to rent a 3 room (2 bedroom, 1 living room) apartment somewhere close to the Rynek and am wondering how much can I push the agents for a cheaper price. Also, how much should one expect to pay for electric heating in the winter months?

Yes, it is possible to negotiate successfully on the price of rental apartments - though not always, it depends on the owner. Make an offer and see what the reaction is!

There has been downward pressure on rental prices for the past few years, and this has been particularly evident this year - many apartments which were bought by investors during the boom have only recently come on to the market.

A three room apartment could be 60m2 or 100m2, so the price of electric heating in winter will vary according to size. You could pay between 400-700 PLN per month for electric heating in winter. Much better to go for a flat with gas heating where you will pay more like 200-300 PLN per month for heating.

For anyone who has the ready cash, now is the time to buy.
Find an apartment, tell them you're paying in cash and then negotiate the price.
Better if you find a private seller, estate agents charge the buyer of the property as well as the seller.

This is not the time to buy. Those people whose apartments tripled in value in 4 years honestly think(believe the hype that they are rich) they will sell now for only 10 or 20 % less.. They can dream on if they think that they are not living in the same world(major world recession-depression) as the rest of us. People who tell you to buy now are either sellers or ....!!!! actually only sellers would advise that.

>>>only sellers would advise that.
I am not a seller but a buyer.
I already have one flat bought in 2002 for 2,600 per metre 10 minutes from Rynek. Ideal location. Now I could ask 7,000 per metre and they would snap my hand off.

I am thinking of buying another for student rental and as my pension pot.

Your maths needs updating. If someone bought a flat 4 years ago and it tripled in value - then it has increased in value quicker than any money on deposit - not unless you know some extraordinary bankers.

Do you mean on average 10% less than the asking price ?

or

the offer price is on average 10% of the asking price?

I still believe the property prices in Poland will be no different to anywhere else in the world. All bubbles burst,it is deflating at the moment but once the illusion is realised it will quickly return to Polish prices.

And even then you won't be able to afford anything Mark. Not unless you get a job and stop spending all your time spamming forums in your one-man war to drive down appartment prices in Krakow.

Harry,
Please, stop harping on about milky/Mark.

For the last year practically no activity what so-ever except for the ultra niave buyers(who are getting fewer and fewer) who believe the staged hyped weekly reports that the market has bottomed out. If the property prices(prices at the moment) are bottomed out, the wages in Poland would have to had at least quadrupled in the last 5 years. The prices are based on Poles earning in the west and foreign investors etc etc..It all a load a shype.

...why do I get the feeling (and I know that you hide it very well) that you somehow in the deepest corners of your soul do not like Poland. If you don't - that's fine. There are plenty of people who live there (I've heard that millions of people manage to survive from day to day -).

We get your message loud and clear -...but you know, there is a maxim that "the one who shouts the loudest has nothing to say".

Million of people survive everywhere even Mozamboque what your point?


I spoke out very loudly against the bubble in Property in my own country since it began,so does that mean i dislike my own country??

"All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident."


who is "we" the developers??bad news buddy im talking to everyone so ......
its all shype, and I adore Poland and its people and look forward to the day it is not hijacked by developers,
I think somewhere not so very deep down inside you know people like me know that you are just a car-sales man

or car-sales woman i mean..

...you're wrong...
one piece of advice I will offer you for free...if you don't like something, then get off your ... and do something about it. Join a party, organisation, club where your views will be listened to, considered, taken as the truth and acted upon.

On the other hand...just sit back and see if your predictions/intentions/soothsaying monologues come true - then you would rightly have the right to say 'I told you so'.

Prices of property in Krakow will not drop very much now...even in used properties.
The mentality of Poles is that they would rather have an empty house/flat on which they have to pay rates/media...than let it go for a reduced price.


....that is not the way to drive prices down. I've already said something about the Polish mentality. They would rather have an empty house/flat on which they have to pay bills for two or three years, than reduce the price by even 10%.

In my kamienica, there has been an empty flat for 3 years, but she will not lower the price, so it's staying empty until someone can afford it or it will stay empty for ever.

Her reasoning behind this:
It is better to have your money tied up in property that nobody can afford to buy - than take 90% of market value and put the money on deposit..

Clever, - now why didn't I think of that.....?

By contradicting the dominant view point/lie flowing out of here, IS doing something. I will not join any party because they all end up just lackies of the free market.

Real-estate is a gigantic problem in Poland that is crippling the majority, so it needs to be discussed rationally.


Thats your point, so ok im a democrat, i will accept your opinion, however my opinion is that it will keep dropping until it reflects the salary of the actual Polish people working there.


This property bubble is only five years old so how can you speak in such generalisations about the mentality of the Polish people. The people on this site who are holding back with their super inflated prices are not Polish ehhh!!

Anyhow i will sit back and watch reality evolve, not my predictions.

The only way that the prices of property will fall significantly is if the price of new builds fall. The only way that the price of new builds will come down is if the price of land, construction material and labour comes down.

If you are using USD or Euro for your property purchase then your exchange rate is far superior today than what it was 18 months ago. Terri is correct with his slant on Poles, they would prefer to starve than sell for less than the neighbor


Milky, the mentality will always stay the same for at least the next twenty years.It is only the outside appearance that changes. It is still the same red and white that flows through the veins. You cannot think about Poland with a foreigners hat on.

true, no 'foreigner' will ever understand the Polish mentality, and not only with property sales.
I think it's the same with jobs. I have been unemployed and after applying to many companies, took the first job offered - a Pole will stick out until they get what they want...because.... they didn't study for 5 years (and now have a MA) to flip burgers.

So they would rather be unemployed and rely on their parents than take any job.

Hi ,

I am reading your post with a lot of interest I am travelling to Krakow next week to investigate property/build contractors -

I want to either

a. find a jont venture build contractor for building houses on my building land near Liege Belgium

b. swap some building land near Liege in Belgium for built property in Krakow.

The reasons behind doing so is my belief in the ability of the Polish contractors and the sustainability of Polish economy.

Do you think (subject to the quality of the land near Liege/ house prices) that this would be a feasible proposition.

Yours

Tony

I also agree, this is absolutely true !

well if they don't sell for at least the 2006 price they may starve.

Its seems the general view at the moment is that average prices are more or
less stable in Krakow (I guess if you account for inflation this means falling gradually).

Does any one have any breakdown of the prices in different market sectors?
For example the prices of apartments in the old town versus new-builds?

I was told by an agent that the prices of the larger flats in the old town are falling
which seems reasonable given the low rental yields...

Also regarding a flat for renovation. How much per sq m would the renovation cost
(new bathroom, kitchen, windows). I've heard a figure of 1,000 zl per sq m.
Can anyone recommend a company operating in the Krakow area?

Thanks!

oh yea they will tell you the truth lol. The property bubble prices are just gone beyond the saturation point.


There is no such thing as a stable bubble.

I don't believe prices are going to rise that for sure - and you're right property seems very
over-valued particularly when you compare it to earnings but will we start seeing 20% falls in the coming months on top of the 20-30% falls already? My guess is probably not

but I'm not familar with the Krakow market so that's why I'm interested in other
peoples (objective) opinions.

No they will not fall that much. The problem you have here is one very bitter individual who failed to buy a flat in Krakow before the prices went up and now he's trying to drive prices down by spamming every forum he can find and only doing that in an attempt to drive prices down to a level he can actually afford. I won't mention who it is but you might well be able to guess.

You wont get it here for sure.


Lot of classic spin going on here, and all english speaking sites that are associated with Poland. Go investigate it for yourself...Stick to Polish language sites..

You are right on the money. My wife and I have just come back from Krakow and spend two weeks shopping for our apartment. We have waited and re-shopped for the past three years to see how this market changes in Krakow. Again, your are correct as the sellers are still in denial in the prices that they try to still sell their flats at. Again you are correct as the agents do not want the buyers to bid low on a flat that is too expensive. We did manage to put in an offer but it was our price that we wanted to offer as both the agent and the seller were trying to have us offer at a higher price. A good item to do is to price every flat out at the per meter price. Another interesting point is that there are some new developments in town for example--kremerowska-residence that is newly built and still has that 2007 has that per meter price at around 15,000 zloty. That was still amazing and crazy as this is not Paris!

Janek

Its not just crazy its a Ponzi scheme, based on Poles earnings in the west. Cities like Lublin with the lagest emigration will see their property prices going down slower than Krakow,Warsaw as their property buying population is elsewhere.The denial going on can only last so long, as economics call the shots, As one of the more objective guys on this site said recently something has to give.

I contacted an agent about a flat in that building fully expecting that they would be
willing to accept an offer significantly lower then 15,000 - but no. I lived in London
for a number of years and for those prices you could buy a flat in a good area
close to the centre. They claim that only four flats are available something I find
very hard to believe.

15,000zl per square metre is £3,000, so a two-bedroom flat (say 67 metres) is going to cost about £200,000. Strangely enough £200,000 in central London doesn't even buy you 6 square metres: it buys you 5.6 metres

dailymail.co.uk/news/article-1258045/Flat-smaller-snooker-table-worth-200-000.html