Poland's apartment prices continue to fall

Seems like demand is increasing.

Taking these reports as face value, in your experience where is buyer funding coming from?

If we take Wrocław for example, we have estate after estate of new flats, all over the place. I noted the other day that one 1-year old development seems to have about a 75% occupancy rate while another (4-year old development) up the road from there seems similar or slightly less with the devs still pushing flats online and with banners (prices having been cut by something like 30% if memory serves). However, this newer block does not seem to be cut price at all and even if a 20% discount is assumed then the prices still come in at just below 5K a square metre before finishing.

With the likely price of most units being around 450K PLN, how are buyers affording it?
Family money? Lots of wealth, more than people realise?
Money from working abroad? Remarkably clever saving up of typically minimum wage incomes in the UK, Eire or Germany etc?
Mortgages (450K given from a typical single yearly wage 50K or 100K joint income I presume)?
From the sale of a secondary market city property? Yet so many here have yellowing or faded for sale banners and don't sell for years.

Bit of a mystery to me as to where the money's coming from, which is why I genuinely ask. I do hope it's not lax lending, namely liar loans or speculatively optimistic multiples.

Nice timing for local devs here if this works out for them, as several estates are just about ready now to sell into any strength if this story is true. Of course, they will to some extent have to compete with each other but if the demand really is there that won't be a problem surely?

Cliffnotes:
- Amount of new mortgages is increasing.
- The value of the mortgages is increasing.
- Still a way to go before they reach the top pre-financialcrises - years of 08 and 09!

Purely anecdotal I know, but there are lots of new estates here.

Only one seems to have any meaningful number of new residents (not cheap flats either, mid-range, but slightly unusual in design, more British looking is the way I'd describe it but not executive or anything that interesting at all, and miles out of town).

The others seem to be empty or nearly empty. Probably empty, though, not just nearly empty.

I expect them to get occupied but very slowly. One estate still has empty flats after 4 years. They recently cut prices by 30% to shift a few.

Lot of examples of this in Krakow as well.

You can check out gardenrecidence.pl

I was very close to buy apartment here back in 2009-10. (dont remember exactly). From 450 units, still 220 is not sold!
Just for fun I sent a recuest for a cuple of months ago. "I was very intrested in a apartment - Aprox 75m2 with garrage"

Answer: Yes we have free apartment. The pice is 680.000, and you can get a garrage place for 50.000.

Fantastic (", 0% discount from the initial price back in 2008!

I dont say that just becouse the amount of mortages is increasing we are "safe". But I think it is a smal, but good, sign, that we are moving in the right direction!

Good luck with the hunt!

I was in Ireland in 2007 and was under pressure to buy. I said "no way" and I'm glad I said that as I saw 50% off the prices by last year. Everyone else was buying then, or that's how it looked. But some of us were sitting on our hands.

Here in Poland, it's a bit different and I'm not sure what's going to happen. But looking at wages, I scratch my head, it all doesn't make sense to me. But I will think about buying if ever I "get it" and see it makes some sort of sense, such as depreciation is less than my rent.

Hehe

You are not alone to do that.

According to statics, the avverage sallary is 3.500 pln a month. But to drive a car for 120.000 and buy a apartmetn for 400.000 (10 times your yearly sallary) is "no problem"

I dont get it, noone I talk to from outside of Poland "get it" and I dont even want to say what the poles them self are answering when I ask about it (the knowledge about alternative cost is just not there)

But I guess we just have to adopt to it and understand that things work a bit different here compared to other economis (",

Yes, 3500, and yet quite a few 'ordinary' people in some cities would regard even that salary as aspirational. Yet, they're driving quite new cars and might be buyers of these flats that are springing up everywhere. I can only assume they have rich family members gifting or loaning them cash, as otherwise the figures don't stack up -- unless of course lenders are not checking loan applications rigorously (as happened in the UK, we call them 'liar loans'). Other than that, the possible explanations are that couples think it normal to combine their incomes to buy property that costs about double or more than 10 years ago, or that cities really are full of people on very good salaries from jobs at these new global firms and so can afford 5000PLN per square metre for a flat in Wroc without batting an eyelid, plus of course the monthly admin charges which are something like 500 or 600PLN excluding electricity and gas. On the subject of gas, due to building regulations, not that many new apartments have gas, which means electricity has to be used for cooking (electricity being notably more expensive for that purpose at the moment).

Actually, more like 4300 pln in 2013

That would be quite a leap then as KPMG report it as 3522 for 2012 and it has never increased by that % before, especially in the face of rising unemployment. What is the source of your figure, please? Some revision since KPMG went to press? See below for an extract from their report.

• 
  KPMG Poland report on average salaries
  

Polish Government statistics website.

There was a thread about the cost of living comparing the number of items (bread, milk, petrol etc) you could buy in 2003 and now. The figure and source is there.

But the graph in my post is from that source via KPMG. I can't find a 2013 figure showing such a leap in wages. Please post a link.

Are we sure we can trust any optimistic figures anyway, with an election next year I think?

These are the stats I could find, from stat.gov.pl/gus/5840_14916_ENG_HTML.htm. Only the Warsaw region seems to be significantly over 4K a month. This neck of the woods is about 3850 (notwithstanding the pinch of salt we might need)

No

Voivodship

Average monthly wage and salary (in PLN)

1
dolnośląskie
3 850,52

2
kujawsko-pomorskie
3 385,30

3
lubelskie
3 504,31

4
lubuskie
3 341,57

5
łódzkie
3 558,00

6
małopolskie
3 642,28

7
mazowieckie
4 742,84

8
opolskie
3 514,71

9
podkarpackie
3 342,55

10
podlaskie
3 424,01

11
pomorskie
3 882,14

12
śląskie
4 002,29

13
świętokrzyskie
3 388,98

14
warmińsko-mazurskie
3 259,81

15
wielkopolskie
3 547,93

16
zachodniopomorskie
3 593,65

Thats odd, I'm sure the figures can from that site.

It might be there somewhere, perhaps it's some sort of calculated average. Anyway, we'll see what happens. I did an evening walk along many new/newish estates here locally (within 2 miles) and most don't even have one tenant yet. Although a smart block that was built last year has about 40pc occupancy maybe less, plus most of its downstairs shops are let. It looks a lot like the devs are happy to play a waiting game. In which case, if I stay in Polska I'll take my cash to a realistic secondary seller (also probably not easy to find). At the mo, not sure I'm staying as prospect of employment is about zero unless I want to teach English (I don't, it bores me and I'm not suitably qualified).

Miłego weekendu :o)

Were prices inflated by foreign investors?

Actually, you do need that pinch of salt. It is very common (due to the high social insurance taxes) for people to be paid only part of their salary legally, with the rest 'na czarna'. I forget who said it (possibly KPMG...) - but something like 25% of income isn't declared in Poland.

What you haven't taken into account is that many of the older people who occupied very nice flats in good locations are now dying - for instance, in Wroclaw, in those flats near Galeria Dominikanska. They're worth quite a bit of money on the open market, and the sale of one such flat would easily pay a huge deposit on a new flat somewhere else.

No one I know of has that arrangement, or they've not told me if they have.

Of the people I know, one big cheese in IT is picking up 8K a month gross and the others are taking home 2.8K after deductions.

When I talk to people who are working in shops, they're getting peanuts.

I don't know of the flats you mention. There's a new square or open space and car park near GD, no nice flats in the area that I can think of. Dotted around the city centre are flats for sale (many have been for sale for years), they're mostly cheaper than the ones in the suburbs, but I've ruled them out as the city centre doesn't appeal one bit. Someone on here once offered me a city centre rental and even though it was probably a nice one I'd hate to be anywhere in that area -- noise, stinky air, hassle.

They certainly wouldn't, not least because Poles don't often admit to their cheating ways.


A genuine big cheese in IT would be picking up a hell of a lot more than 8K gross, I can tell you that. Junior programmers here can take home 5-6K a month here gross - a big cheese (or even a small cheese- let's say a project manager) would be on at least 150k gross a year. Even a relatively junior SAP specialist would be taking home at least 6-7k a month.


Reflects the work that they do.


They aren't nice as in appearance, but they're nice in terms of size and location.

You are certainly exaggerate that phenomena, I wouldn't think that that practice in Poland is not much more common than in Scotland.

None of 'em would be to my taste, they're square, 'orrible, on busy roads. They'd have to pay me to buy them. And the prices suggest my view is common.


He is and he ain't picking up more than that. He's managing a big team. I asked on a thread here a while ago about typical salaries for his job, because I couldn't believe how little he was getting at that huge firm.

Do you must buy a place in Wroclaw>? I think outskirts would be a better long term option for you.

Possibly, and I ain't going to be joining in with that I assure you. Agents don't like me in the UK or in Poland because I don't pay what (stupid prices) they ask. Hence they never contact me again and I have to keep renting :D


Maybe, if I wasn't so phobic about driving here. The roads scare me. I know, I know, I am a wimp. I am disgusted with myself on this, I really am.

ober-haus.pl/files/pl/files/pl/reports/aktualne/Ober-Haus%20indeks%20cen%20mieszka%C5%84%20-%20polskie%20miasta%20Grudzie%C5%84%202013.pdf

The numbers for Sept to December is out.

Clifnotes:
From month to month it look like all the five markets (wars, krk, poz, gda, Loz) is getting close to 0. Most markets have 2 or 3 months of falling prices and 1 or 2 month with increasing prices.

Based on this numbers I feel its rather safe to say that the fall in prices from 2008 now seem to have taken a break.

Its hard to find any fundamental variables that should give us a bounce back to the "old prices", (GDP, U-rate, Banking-changes, intrestrate) but the Psykological effect from "that the bottom is here, and now the prices will increase" is sometimes a very strong variable and should be taken into account when to predict the prices for the next 12-24 months!

GL

GL,

Here is one for you, an Irish chap I spoke to has not paid his mortgage on his buy to let for twelve months, the bank contacted him out of the blue in Ireland six weeks ago asked him, "what are your intentions with the flat"?

Hi retort was I will send you the keys and you keep my 20% deposit and the last 5 years repayments and wipe the slate clean, as you miss-sold me a CHF/PLN mortgage. He was contacted last week by an agent of the bank informing him, the mortgage amount would be reduced by around 10% and if he could sell his property for 350,000PLN it would be enough to wipe the debt. Of course he has asked to see it in writing with a copy of the contract. Based on this account seems the banks are doing deals through outsourced agents allegedly.

Drives me nuts. Sorry, just currently dealing with a person who asked for money under the table for his convenience, and now he's not exactly rushing to get the contracted work done. Live and learn.

Rather interesting reading, thank you for posting this as it is something also of interest to me. I'm thinking of buying but so far do not understand the price-salary relationship because everything still seems expensive in the cities. Of course, with low interest rates, this is no surprise, but some locals suggest that the prices will not fall even when rates rise. In which case either they have hidden resources to buy, are rich foreigners, or wages are going to spiral up.

The flat is 48m2 was renting for 2.200 pln per month and is on ul Olawska 22,Wroclaw, I can put you guys in contact if you are interested he will be looking for around 8,000 pln per m2. As you know it is practically on the rynek.

No I'm not thinking of buying that, I was making a general comment. Not sure who it was but someone on PF directly offered me one near the Rynek in 2012 or 2013, and to be honest the Rynek didn;'t & doesn't appeal. The ones I looked at (and to be honest still thought were over-priced, in the 'burbs) were almost half that figure per m2.

edited/deleted as not 100% sure I got the renting thing right yet, it might just be shops

OK, can now confirm that I didn't misunderstand the Polish and indeed some developers are renting out their newbuild apartments later this year. Only 2 so far. I think this will be at the semi-luxury end (but large blocks), however, so don't expect it to be cheap.

An overview of the market:

globalpropertyguide.com/Europe/Poland/Price-History

German bank says Germany's property is up to 25% overvalued
cnbc.com/id/101423064

I still don't understand why a 2-room 50m2 flat in this city (Wrocław) is about US$100K, when local wages are an average of US$14K. I obviously know nothing, and I admit it. I have seen some prices fall, but they still look pricey to me. Like I said, I know nothing, quite obviously, as developers' prices remain quite firm for the newest stuff going up.