Poland's apartment prices continue to fall

You can't take the stupid out of Real Estate, can you?

If average is misleading, then every price the average is made up of is 'misleading'. The average is neither right, nor wrong its the average of the two.


Those are nominal prices. Add on 20% to the 2006 price, for instance, for inflation

bankofengland.co.uk/education/Pages/inflation/calculator/flash/default.aspx

In Battersea, on my street, prices are at 2006 level but that ignores the 20% rise in inflation

And how many people have had a 20% pay rise since 2006?, what does inflation mean to those whose wages have been frozen? Inflation is bad, deflation is bad. I think the people who live in that particular road would be very happy to have lived free for the past 6 years, their capitol is still intact.

The cost of living has gone up 20%. Their capital has not been protected, it buys around 20% less. People haven't had wages rises, but prices have risen by 20% so they have less disposable income to save for and pay for property.

You don't get inflation do you? You really should get your head around it. Look at the Bank of England inflation calculator.

Lets stick with the the example of my home city of Bristol which I gave yesterday but lets go back over a 12 year period:-

Average Property Selling Prices in Bristol (£000's)

Apr 2000 May 2012 Change
Detached £149,481 £313,687 +110%
Semi £100,102 £210,581 +110%
Terraced £78,086 £182,606 +134%
Flat £83,464 £174,151 +109%
All £94,706 £202,182 +113%

Inflation rate in the UK between 2000-2011 totals = 22.7% or 2.06% per year

Can you tell me the loss of the property capitol due to inflation?

The government gives the figures for inflation by using a "basketful" of goods and services and monitors their prices over a monthly period. I believe they exclude mortgages and benefits.

Since 2008, most people have been cutting back on their expenditure and shopping around for cheaper bargains. A lot have been repaying debt and forgoing holidays and new cars. Many people deal in cash with their business's so it would be safe to assume that not all this money is declared as income. (basically the same way as people cannot understand how the Poles survive on 1500 PLN per month)

A slow steady inflation rate such as what has been seen in the UK over the past 11 years doesn't really hurt your wallet. Most businesses give yearly raises of three to five percent per year, and the yearly inflation rate has averaged out at 2% per year.

When inflation really hurts, is when it rises faster than wages. You can probably cope with a one or two year spiral of this sort, but when inflation out paces wages for an extended period of time, you will then feel the crunch, but with the figures as they are, only people who cannot manage their money and who over borrowed are going to be in trouble.

Will house price downturn continue until autumn 2013?

2012-08-31

Q2 2012 saw continued declines of house prices in all the major cities in Poland in the wake of the rising supply of flats on the market and a limited access to mortgage loans. The price slump is like to continue until the autumn of 2013 at least, according to a report prepared by Centrum AMRON on the basis of data stored in the AMRON and SARFiN systems.

According to the report, prices dropped by 1-3% in Q2 2012. Compared to Q1, the largest decreases were reported in Wroclaw with the average transaction price falling by PLN 182 (€43.5m) to PLN 5,473 (€1,308) per m². In Warsaw, the average home price was PLN 7,407 (€1,770) per m², down by PLN 129 (€31). In Q2 2012, housing prices in Krakow averaged at PLN 6,187 (€1,478) per m², in Poznan – at PLN 5,103 (€1,219), in Gdansk – at PLN 5,397 (€1,289), in Lodz – PLN 3,793 (€906), in the Katowice urban agglomeration – at PLN 3,166 (€756). On an annual basis, the steepest declines were reported in Wroclaw and Lodz with housing prices decreasing by PLN 673 (€161) and PLN 323 (€77), respectively.

The researchers argue that falls in transaction prices are not sufficient to encourage customers to buy flats and seek long-term loans to finance purchases. Falling wages and rising costs of living result in borrowers having a lower credit score, which counterbalances the advantages of decreasing home prices.

Keep 'em coming, BRS ! :o)


Interesting!

The report is not to be trusted if it's reporting this!

Must be those poor welders in Gdansk, perhaps they are taking a pay cut from 8,000 a month , down to 7,000 ?

The polish version of the report actually talks about falling real wages which is correct in many sectors.

Suggest you check their website as the research itself is robust and is based on transaction prices not asking prices - amron is set up by a group of banks to monitor mortgage lending.

^ How is our bet coming along?

You will probably win. Though I was correct in picking wroclaw as the worst performing town then on these numbers It's only 12 percent down.

Probably will get to a 20 percent drop eventually, it's just taken longer than I expected.

Still a month to go though ! In any case I'm fairly happy about getting 300 k off the asking price of the new place. Notary next week fingers crossed.

That's quite believable -everyone seems to be holding their breath this year.


It's not a real surprise - isn't Wroclaw heavily based around services and not manufacturing?

blogs.ft.com/beyond-brics/2012/09/07/poland-no-end-to-housing-slump


Lose a battle, but winning the war

That all depends on the personal perspectives weg.

I think for most its just prolonged pain, if the stubborn asses keeping their prices high started reducing a bit we could get down to realistic prices again and we might begin to see some signs of a normal market - for the first time in Poland.

I think its widely accepted that the prices will drop further, once that happens the quicker it will recover, till then its a state of property limbo.

Somewhere the truth is out there.

wbj.pl/article-60227-residential-developers-report-positive-results.html
wbj.pl/article-60257-poles-have-zl1-trillion-in-savings.html
telegraph.co.uk/property/9520883/In-pictures-the-ten-best-places-to-lose-your-money-in-property-over-the-past-year.html

Personally I'm hoping that prices don't hit bottom for at least another three years (I've got three more years of school fees to pay).

Thank you for posting that, Avalon.

The Telegraph 10 Places link - it says "6: Poland (figs for Warsaw). Year-on-year fall: 8.19 per cent"

But as you rightly say, there are conflicting messages in other reports.

FWIW locally to me, seems a bit depressed but the prices so far are mostly fairly sticky, even so.

People are telling me, however, that they are feeling a bit of an economic pinch at the moment.

I think I am also seeing prices rising in some groceries I buy.

An interesting question - is there any data at all on the sales of pre-1990 flats?

1 trillion zloty is about 30k per head. Doesn't really support the theory that prices are going to rise, in fact it's less than the required deposit for a modest 50sqm apartment in most big towns.

Of course it is a record since history consists of serfdom followed by colonialism, oligarchy, nazi rule and communism.

On the contrary, its hell of a lot of savings

Per family thats about 140k pln or about four year earnings. In contrast the UK has £53k of DEBT per household.
creditaction.org.uk/helpful-resources/debt-statistics.html

Polish households have load of cash and about 95% are mortgage free. Only thing stopping price rises is the unavailability of credit.


(off topic here...)
Nobody in the UK has had pay rises over the last few years, inflation causes real pain now as its 20% over that period.


You won't get it. Maybe you are right and the worlds economists, politicians and savers are wrong. Maybe it really is all funny money magic and harmless. I just know that when 120k is required to buy what 100k could have bought 5 years ago my capital was not 'protected'.


It is true property has increased far above inflation and wages if you go far back enough in time. Not been true since 2006/2007.

It is obviously unsustainable in future as it was entire funded by banks engineering money. This cannot continue (Basel 3 makes sure of that) so banks will continue reducing their lending and prices will continue their real/nominal falls. Until UK households and banks repay their debts UK house prices will stagnate at best, even if it takes another 10 years.

That isn't 'protecting capital'.

A new report on debt reveals that over 2.1 million Poles have trouble with repaying loan on time, with total arrears amounting to 30.9 billion zloty (7.8 billion euro)

Wasn't there a link given a while back showing Poland to have the lowest disposable income in the EU?

The economists have no idea, otherwise they would have predicted the crash and know what to do about the Euro crises now, today!!!
The politicians likewise have no idea what is happening and are only concerned with getting elected/re-elected and preserving their perks, plus, they are all liars.

The savers are getting, sweet FA interest and you of all people should know this as your inflation eats away at their money, so why do you even mention it?

You should have been a banker, your something close, begins with a W

And I guess you do have an idea.

Its not an economist job or purpose to predict the future; but many people, journalist and 'experts' did predict the crash. That made little difference because there is an overwhelming desire by people and politicians to get rich through property speculation.

People will lie through their teeth about everything to keep house prices rising, nothing anyone says will stop them believing in fantasy.

This is how Pyramid schemes and con-men operate, you don't have to lie to people, they will lie to themselves.

You are mixing up statistics - uk savings are about 40k per head- in pounds. More than 6x the polish amount.
Poland also has a household debt figure. From memory it's about 300 pln per head. Not much.

If you net the savings and debt amounts then despite being totally in the mire the uk household is bvously much wealthier.

There are plenty of other factors that depress prices apart from lack of credit - more important are falling real wages, unemployment over 10 percent apparently permanently, reduced labour mobility, higher interest rates, inability of poles to raise a deposit and most importantly from day 1 of economics o level there is an oversupply of unsold, apartments.

Really?

UK: Average debt of £53K minus (your unsourced claim) £40k = £13k DEBT, or 50% of average earnings.

Poland: £28K- £60= £28K SAVINGS or 400% average earnings

Debt is a burden everywhere, whereas savings are an income stream in Poland (not however in the UK with its negative interest rates). UK household debt is measured at over 150% of GDP, far higher than it has ever been before and one of the worlds worst figures.

Poland the number of mortgage free owner-occupiers is about 3x the UK. Poles are relatively cash rich, especially with the lower housing costs versus the UK.

The potential for another housing boom in Poland is still there, absolutely no chance of one in the UK for as long as 10 years.

Increases yes- Boom no.

Are the rents for a flat in Warsaw, also going down? How much are they now? Like for a fully furnished, three room, with all included?

Valpomike

Here is the cost & earnings report 2012 UBS.

ubs.com/global/en/wealth_management/wealth_management_research/prices_earnings.html

propertysecrets.net/blogs/overseas_mortgage_finder/tag-overseas.html

The survey also claims that Poland and Cyprus are teetering on the edge of collapse. Ireland remained the world's weakest housing market with prices falling 16.85 per cent in the last year and yet a very recent survey from Reuters, Irish house prices grew for just the second time in five years in July, rekindling hopes that the market may be bottoming out after a four year slump of as much as 50 percent

Thanks for posting.

I'm seeing a fair few morefor sale banners now on flats and houses. Also lots of shops to rent.
In the better areas of Wroclaw, still no noticeable increase in what's for sale, not as far as a quick look round would reveal anyway.

I was in Biskupin a month or so ago, lots of flats to rent on the many noticeboards there at the tram loop, plastered in them it was.

Is the NBP about to loosen its policy in reaction to all this? Is it wise for people to load up on debt now to buy property? Are there the definite jobs in the pipeline to pay off the mortgages?