The current property boom in Poland is a bubble

Of course, their reporting could reflect an accurate trend now into Q1 2013, however the report is based on 2012's figures. Interestingly, they admit that developers have 2 years worth of regular flats to get rid of.

you wouldn't believe it anyway. And that is my point. My husband knows and has worked with each and every one of these guys that wrote this article, except the lady- but yet you believe them --they work in residential real estate and for developers- do you not think they could have embellished the information depending on who pays them? This sort of thing actually goes on a lot in this market. And yet, you slag off my husband but yet you believe these guys. Perhaps if you knew them you might change your mind. Particularly when they drive up with their new flashy cars and start bragging about how much money they made last year.

I don't work for a developer, my husband doesn't work for a developer but he actually does know what is going on in the market- and nobody in residential is paying him to. We are trying to purchase a rental flat based on the existing market and experience. And commercial, residential and industrial real estate is all connected.

Granted, Warsaw is different than the rest of Poland- but it is not completely opposite to the rest of the country.

MMM?? I know you don't recognize bubbles when you see them, but, is there are graph here ?

So you even admit that is how it rolls.

Tell me who pays to advertise that property prices are falling in Poland? I'd love to know how you can make a business out of that. Mind you, they are not the only organization and report of falling prices. You can go to the websites selling property and see the falls in prices in the past two years, Go into an estate agent and watch them over a period.


Well that covers 0.001% of the Polish property market, which according to that report hasn't fallen much. The report was paid for by the developers of luxury property in Warsaw, who of course have no interest in keeping the prices of their exceptionally expensive properties.

Heres some credible websites the Wall Street Journal

online.wsj.com/article/SB10001424127887323622904578129090710313614.html

The Financial Times

online.wsj.com/article/SB10001424127887323622904578129090710313614.html

Price Waterhouse Coopers. Apparently one of the most respected auditing companies in the world has more faith in REAS than you do, but what the heck you are married to the God of property

pwc.pl/pl_PL/pl/publikacje/Polish_Real_Estate_Market_2 011.pdf

Dunno who this is but its better than your feeble attempt

globalpropertyguide.com/Europe/Poland/Price-History

absolutely, I have never said it didn't. But it wouldn't make sense for my husband to lie to himself when purchasing property, does it.


He really does think this. But then again he has the numbers to back it up. He is at a place in his career where developers are requesting his services instead of having to go to the developers.

you really have no idea about real estate do you. I will let you in on a little secret. REAS is a two tier company.- they are nothing. They do warehouse appraisals in Opole. In Poland, all the big name real estate firms have an alliance, something called the Warsaw reasearch forum (WRF), they plug in information and statistics about the market. And all of them are able to access it. REAS has literally stollen and copied all of that information. PWC goes to them because they have access to all information and they are cheaper. So what you have read by REAS is not written by them, it has been written by my husband (also known as the god of real estate) and his colleagues.

So perhaps you should stick to the stuff you know, because it is quite clear you know nothing about real estate in Poland.

so once again....the prices are dropping because the market is saturated. They are leveling off and will probably stay here for quite some time until the demographics of the country changes. There is no bubble.

but everyone else on the planet who isn't selling property, disagrees. It will be well into spring 2014 before there are any signs of an end to the deflating bubble. Already at Q1 2006 prices in Krakow.

Hehe, I must say. This is rather funny reading - Milkey and Pip, Pip and Milkey!

You put to much personal intrest in it. When you Milkey say that the prices in Krakow is back to 2006 and that we are in a buble I must disagree with you. Maybe the prices are back to that level and that this new avverage price reflexts the economical environment better then the prices from 2009 - 2010 did.

To say that we are in a buble, is maybe to drag it to fare. In 2010, yes, today, maybe no.

Today the prices has falen for nearly 36 months straight. From my point of view its not a buble that has exploded, its more that the peoples expectations has adjusted (a bit slower in Poland then in other markets), some foreign investors has pulled out and a rather stiff depreciation of the zloty. Are we done with the downturn? I dont know, but from where I stand, the downturn has been moderate and controlled, and not like the typical pattern after a buble witch is dramatic fall within a limited time span. I would call this periode a adjustment of expactations, and maybe edjucation periode for both polish landlords, contracters and speculators. Not a buble burst.

To you Pip. The prices has fallen, and they have fallen quit a lot. It not so easy to see it if you just think of a drop from 9.500 to 8.500 during a 36 month periode. If you adjust it for the inflation, the capitalcost (that has been crazy high in Poland way to long) and the decepraiton of the currency, the numbers become very very nasty and you dont need much imagination to understand that those investors will have serious problems to come back to this market, not in the nearest future, maybe forever.

Beside that: Intresting reading - Keep it coming. More links to statics to establish / underpin your own arguments is highly appreciated!

yes, but I never denied they didn't. Here is the fact. After the fall of communism- developers came to Poland and started building. The first ones in made serious money- they had a corner on the market- and they were able to charge as much as they wanted. And people bought them- because there were no better options.

Fast forward to where we are now. The market is saturated. Buyers have more power than in the 90's. They are able to negotiate prices or get bonuses when purchasing property.

Because of the saturation in the market--the prices are dropping, but people are still buying. Not at the same speed as in previous years but people are still buying and developers are still building. This is not a bubble.

Someone here had the nerve to say that commercial, residential and industrial real estate are completely separate and should never be compared.
Once again, ad nauseum, they are all connected. The companies that rent commercial or industrial space in Poland effect residential because they hire locally. They pay well for Polish standards so employees are spending their money. Including buying flats to get out of their sh1thole blocks.

I think what is really frustrating about this whole post is that some know-it-all jackass keeps posting that the sky is falling when it actually isn't.

Slowdown/downturn--yes, nobody has ever denied this.
Bubble--not by a long shot.
Another thing is nobody is considering the Polish mentality of hanging on to property till death. Selling up is not done here. People buy houses and live in them for the rest of their lives.

In North America we upgrade when we have the money. Starting small until we can afford bigger.
So this is another reason why the market has slowed. People already live in their retirement home because they will not sell up.

I will never agree that there is a property bubble. Because there isn't. I also think it is fecking hil air ee ous that these links that the previous posters have put on here are actually filled with information in part written by my husband.

With the NBP having cut interest rates by .50 last week, I am not sure if property prices will continue to fall if mortgages get cheap. Cheap money usually inflates assets, does it not? Not good news really, because it's asset price inflation for credit-fuelled reasons, not growth and prosperity reasons. Not a sound thing.

If you have a million zloty invested in a house at near peak prices, the thought of yearly falls of 5-6% become a emotional black hole.


Indeed it does and there maybe more to come. However, the lending restrictions on mortgages have not been relaxed (unlike other loans), so it maybe cheaper but the amount and availability of lending may not increase.

So prices may not increase because of it.

This is ofcourse true. But when you are discussing economy I think its good to stay away from personal experience and rather focus on the facts. The fact is that today there is no buble (People are not buying overvalued uniteds with the intention to "find the even bigger fool" that can pay even more) BTW: Thats my very short definition of a buble.

When prices is faling rather stedy 3-7 prosent a year thats a market correction and not a buble.

Back in 2008-10 you may say you had a realestate buble. Not 100% like the one we have had in Spain, Irland etc, but surly the fundamental economy could not back up the prices that we had back then.


Well for many people that is a soft definition of a buble: When a lot of finished units remains empty over a long periode of time, and the number increases, it indicates that the market is not in balance. E.G: In Norway if 1000 finished apartments where standing empty in Oslo we whould cry that the buble has burst, and we are now going stright to hell. I know (but dont understand) that the mecanisme in Poland work slower, and that the market need longer time to correct itself, but the sum of many new empty projects without buyers, steady drop in prices, a rising unemployment and a slowing growth rate is all indicators that show that there will still take some time before we will see the prices go up.

If you dont want to call it a buble, ok i actually agree with you (today, not in 2009) but keep in mind that with same conditions in many other countries there would be no doubt about it - The buble still release air - Cold air!

its a lot more than that. On average 10% last year. In one major city it fell 6% in one month.

On average 10% last year? Wasn't that the same year in which you were betting prices would go down by at least double that much?

yes, they fell, but when you consider the fact they were grossly over priced- it is not much of a fall. It is a drop to normal prices.

Why does nobody see this??

Time will tell.

Keep in mind that if the prices has fallen, let say 30% from the top in 4 years that is actually quit a lot, but you also have to add the capitalcost and the currency "cost" as well (for foreigners) and the inflationrate for (polish investors) in the same periode.

If you rather moderate assume a generalt inflation of 12% (in these four years) and the depreciation of the zloty (towards euro) to 30% in the same periode, the investor has lost a lot of money in a rather short time, and for many investor this loose is more then just a "adjustment" of the prices, and feels more like a shinking ship that they can never restore from!

I disagree.

Most of these "first in" builders were foreign so they either used USD or Euro.

I think there's no doubt there has been a bubble. The problem is simply what will happen if -

the PLN weakens (foreign investors using a stronger currency? won't be GBP lol!)
the NBP keeps cutting rates (although I acknowledge the very good points by Peter above which may cancel this out anyway)

Question is, is Poland like Eire a few years back, or is it like the UK in 2004/5 when high prices just went higher when we all thought they were already ridiculous (in some UK areas, prices are now back to 2002/3/4 anyway, but not London and nearby of course)

If i bought a apartment in 2008 for 320.000pln it would cost be aprox 100.000 euro.

Lets say that I boorwed this 100.000 euro.

Then I sell it today, and let say I will get a price of 320.000pln for it. I change that into my currency to pay back my loan, and I get: 77.000 euro.

If you add capitalcost of 10% in these four years I am back even more - 67.000 euro.

And then add for the real price I can get: Let say, 250.000 pln (aprox 20% pricefall). My example gets even worse:

250.000 pln to day would give me aprox 60.000 euro.

As you can see, if the prices has fallen 20% a foregin investor (with euro has his currency) has lost already 40%.

I know you know about this, but I just wanted to show you a example in numbers that state what kind of conditions investors that arrived in 07-09 era is facing today.

I guess its ok to say that with that kind of losses, there will take some time to get them back!

yes, but there are a lot of extra factors that you are not taking into consideration.

Poland is not a typical market much like the rest of the world.

Which is one of the reasons why such persons were better described as 'speculators' rather than 'investors'.

If we take the EU only, Polish residential real estate has little or no liquidity in comparison to more mature EU countries, even Ireland have better liquidity currently in the RRE than Poland. Transparency is a big issue for private investors in PRRE. The market in Krakow is a complete disgrace, they still believe they have the goose that lays the golden egg. Prices in KRK per m2 are above Warsaw per m2 vis a vis location. There is a 100% bubble mentality in the minds of real estate owners in Poland.

and that is part of the problem because they simply refuse to "get" the way real estate works. My in-laws are a text book example of this.

Er, if the bubble mentality is 100% in the minds of the sellers, there is by definition not a bubble.


It's not only sellers: I know a guy who has had his second apartment empty for more than a year and a half because his wife refuses to drop the price below 2,500zl per month (which would have been the very upper end of the price for that place even in good times, today it would go for 1,700 to 1,950).

We just dropped our price for our little flat from 850 to 750zl a month. Our friend has dropped his property from 3500zl to 2000zl. So prices are returning to what they should be.

amen to that

Harry, developers have adjusted their offers with new builds to meet market expectations, As for resales, sellers are still locked in the past expecting to achieve inflated prices not achievable.

A market phenomenon characterized by surges in asset prices to levels significantly above the fundamental value of that asset.Bubbles are often hard to detect in real time because there is disagreement over the fundamental value of the asset.

and this is more common than not. It is a Polish phenom, I don't get it.

That's not the commonly accepted definition of 'bubble' ("trade in high volumes at prices that are considerably at variance with intrinsic values"). If sellers think their property is worth far more than buyers will pay (i.e. a sizable chunk of the Polish real estate market), there is very simply not going to be trade in much volume at all.

There is the problem, Polish sellers come together and artificially keep prices high in desirable locations. They prefer not to rent or sell than lower their prices, Krakow is the worst city in Poland for this practice.