Poland Real Estate 2013 -drops in offer prices, lack of liquidity indicate market crashing

Market crashes refer to large, sudden drops in asset prices in the absence of big news on the fundamentals—such as future asset payoffs. They exhibit some distinct features. Crashes are one-sided—there are no sudden market surges. Large selling pressures in the market typically accompany them. Moreover, the drop in prices occurs quickly but the recovery is much slower. Even though there is little consensus on what causes a crash, the lack of liquidity has always been identified as its symptom and has been blamed for exacerbating its consequences. In particular, crashes are commonly portrayed as market conditions in which the excessive selling pressure drives prices well below the expected value, while little new capital rushes into the housing market to take advantage of the price deviations.

This view is supported by the cumulating evidence that despite the profitable opportunities after a crash—at least as perceived by some observers—new capital flows in only after government intervention or long time lags. The question: is the secondary Polish real estate market crashing, a lack of liquidity and sudden price drops would indicate this is now happening in 2013.

Your thoughts?

good lets get it over with, this has gone on for long enough.

well, we all knew I was going to reply.

I don't think the secondary market is crashing. I think the prices are adjusting to what they should be and not some over inflated price based on their equivalent in Warsaw.

But, having said that- we are seeing more businesses set up in the secondary market, like I posted previously, because rents are cheaper and the workforce is well trained. This will probably cause the prices to stabilize for some time maybe even slightly increase until these companies set up shop. But the fact is that the market is saturated- so buyer will now having buying power.

Honestly I also was thinking its not a crash,just last week I offered 1 mil that was in market for 1.2 mil and I got counter offer for 1,020000 from the seller, second one was in market for 2.1 mil and I offered 1.7 and the seller offered for 1.8, and now I'm confused.the sellers are dropping 100/300k pln in just one counter offer, making me think it probably is a crash not a decline.and if this continues Poland will be great plaice to invest and make over 10% ROI.another factor I noticed is those properties that are dropping there prices so hard had not exchanged ownerships for a decade or more.

Well, isn't that amazing, prices falling everywhere and some poster has found TWO properties worth gazumping.

How incredibly unlucky you must be. Whats your secret?

I've got some flats you might want to buy, the prices are going up every week.

Bid on them will ya? Give it your magic touch :)

what is amazing is some here actually have the guts to say that because something is happening in their city it must be happening all over Poland.

And it isn't.

I have also got some houses/flats worth buying. And if you rent them out to expats you could make 15,000 to 25,000 pln per month. And this I know first hand.

Stop making generalizations based on where you live--because it is not accurate for the rest of Poland.

Yeah.

I'm lost now! Which post were you referring to? Wasn't Dont gag me yo saying that he offered and the vendor came back with a large drop, not a gazump?

Asking price of 1.2m and vendor suggest 1m, 20K. Ask of 2.1m and vendor dropped to 1,8m.

you don't think it is true?

I have clients that are Swedes, Finns, Americans, Dutch,.....and this is what their companies pay for them to live in Warsaw- as well as paying for their children to attend the American school which goes for 60,000 per year.

In the early and mid 90's when there were many more expats here there were houses in Wilanow and Konstancin that went for 10,000 USD per month minimum. They don't fetch that much now. And many former communist opportunists made even more money.

I have two Finnish clients who live in the same osiedle, neighbours. Their rentals are owned by the same Polish landlord who has a massive house next tho the osiedle. He makes about 45,000 a month on rental income off these Finnish families and he screws them for every last grosze.

and if you dont rent them out to expats?

I mean expats yeah, double yeah even.

do you really think any Pole would rent a house for that much? Then they sit empty. Come on, you know Polish mentality.

Real estates' prices were highest in 2006/2007. Since then prices are getting lower and lower.
So those who brought real estate about that time or earlier but missed the peek in prices are now stuck.
Market is not crashing but all ingredients for prices to rise are now out of the picture.
The present are reflecting the reality of Polish economy and is rather unlikely that prices will increase much or drop much more in the next five to ten years.

So those hoping for some drastic changes either way are going to be deeply disappointed. So please do not pollute those forums with your ramblings.

no matter how many times you say it- they still won't believe it. Even when there are people with the market knowledge and work in the industry.

But what happens if the NBP continues to lower interest rates and/or prints money, like the UK did? That caused another boost to UK house prices in some regions especially London and the south-east of England.

It also weakened the pound, caused inflation, and robbed savers.

They did the same in the US years ago and only now are real estate prices slowly on the rise again in some areas. It will take forever until prices are back where they were, and for many folks who are under water it will be too late.

Unfortunately, it pushed some regions of the UK north of 2007's "peak" prices. I hope the same doesn't happen here. Poland's prices seem more expensive than Britain's on a wage:buy/rent ratio.

Pip is right, I am myself letting a house to expats in Wilanow for over 20,000 PLN/month. The reality is that there are 2 distincts real estate markets in Poland, or at least in Warsaw, one for Poles and for for expats whose expenses are paid by their employer. And although the number of such expats has reduced compared to 5-7 years ago, there are still a large number of them around. Why? Simple: if you look at the top 100 companies operating in Poland, half of them are in fact local subs of multinationals, which will probably employ at least 1/2 expats each (often more). Compare this to western European countries, eg Germany, where only 7 of the top 100 companies in the country are non german..

When I started this thread I quoted " drops in offer prices,lack of liquidity market crashing " my focus is on the resale market not new builds although I believe it is possible to get discounts of up to 25% on new builds based on my recent findings. This thread was never intended to be about the expat rental market in Warsaw as this market is truly inflated. I know many people from the expat community in Warsaw and I have very rarely found any family which has been satisfied with their ' rental deal' after 6 months.


The Warsaw market is the benchmark for Poland if there are drops in offer prices,lack of liquidity which indicate the market is crashing in Warsaw, then it is happening in other parts of Poland or will be soon.



There are significant changes going on in 2013 which I can back up with examples, the beginning of the year have seen many large price drops on properties in good locations in Warsaw especially houses. As example there is a semi detached house in stary Wilanow 180m2 with a 700m2 garden on a sought after street, house to be refurbed for 850,000 PLZ ( TBN) this is 2001/2002 price. If we take new builds, a high end Osiedle in outer Konstancin are now accepting written offers on their existing stock, (see how low you can go).


So we can say 75 families needing rental homes in Warszawa.


Lets hope he adapts to the current times as there are plenty of people like ' Bullfrog' out there who are happy to go the extra mile and take his future clients.


The only way to motivate a buyer is by lowering the price, now we do have two markets in Warsaw ' liquid' and 'not liquid'

1. Those who can drop their prices to force a sale. ( liquidity )

2. Those who are forced to rent. ( Not liquid)

As I stated above if it is happening in Warsaw then it is or will happen over the entire country.

Thanks for the post and the thread -- interesting stuff.

These people must work for very foolish companies - my own expat accomodation is PLN 5000 per month inc bills for very nice 200sqm and small garden. its not luxury but certainly as comfortable as I had in my hometown.

The main worry for emerging Europe is the restructuring of Cyprus debt this month - it may lead to a run on emerging markets.

I disagree. I don't believe for a second what is happening in Warsaw would happen in, let's say, Lodz or Lublin or even Szczecin.

Why are there different underlying fundamental principles when analyzing the markets in Lodz or Lublin or even Szczecin?

It is quite simple Pip you can either sell or you can't.

Liquid or Not...

Nothing to do with expat rentals or expats, as they make up such a small percentage in Poland. Furthermore the money in Poland is in the hands of Poles, the Expats come to Poland for the money, otherwise they would stay at home surrounded by their creature comforts.

Sorry if any mistakes. First post!

I have followed the market pretty good the last 4-5 years, focusing on Krakow (where I stay at the moment)

I think that the market for apartments is going to be very bad the next 2-3 years. The new legislations laws about how the developers can finance there projects (cant use from the escrow acounts) has sent the market out of balance (havent been in balance since 2005).

To many grants are given, and to many projects have been startet priort to april 2012. It will take long time to get everything done, but places like Krakow as a crazy overhang of suply.

After april 2012, there is a dramatic reductions in both aplications and grants. The problem is that it take so long time for this to get reflexed in the market. I think (maybe more hope) that it will only take 2-3 years, and that the developers and banks has found a healthy way of dealing with this new set of regulations, and that we slowly can see a normal pace in the construction of new projects.

Noone, in the long run, benefit from a market out of balance. If its over or under investments dos not matter. We need stability. I hope that the adaptions of the new ruls dont go to quickly, but for sure the worst thing that can happend is that it goes to slow. My experience with the polish banks is that we may risk option nr 2... If so: Run and buy, but not untill spring 2014!!!

Welcome, Norwegian. Thanks for posting :o)

so, average drop was 10% last year and same or higher has been predicted by the experts for 2013. I think only sellers are disappointed. On average a 50 m apartment is going down a years earnings,yearly. That's a massive amount.

Pip, take a look at the price of the following apartment being offered in Nowy wilanow, Poland:

On an estate near me they are asking 500,000PLN for a 75m2 flat (3-room) in the secondary (resale) market with no agent involved. That's an incredible price considering local wages are only about 30,000-40,000PLN a year.

Here is one direct from the developer in the same area around the same price per m2

The prices of apartments in New wilanow sold up to 12,000 per m2 2-3 years ago, now you are able to find offers for around 5000 PLZ per m2. Thats real...