Real Estate / House prices in Poland to drop more or rise again? [228]

One thing to remember is that Poland has a very healthy banking system. Lending is not going to be hampered in any way by solvency issues.

Britain - and much of the rest of the world - is currently discovering that driving the base rate right down to zero doesn't make banks any keener to lend to one another or anyone else for that matter. The system is broken.

Poland won't be immune from the slump but will emerge much, much quicker. The government has made it clear that it will not panic cut rates as it has no reason to.

Real Estate / House prices in Poland to drop more or rise again? [228]

Boydie, what currency traders do is neither here nor there. Suggesting that the recent 4 month appreciation of the HUF against the PLN 'means' the HUF is more stable is akin to gurus telling everyone how the unrelenting bull market in Enron shares proved what a great company it was.

Even a cursory glance at the fundamentals will show you that Hungary is totally screwed. Poland does not have a multi-year history of mistakes to put right.

Real Estate / House prices in Poland to drop more or rise again? [228]

I think benszymanski is the only true voice of reason. Absolutely, we're all just guessing - with fingers crossed.

Boydie - did you mean MINUS 60% and 54%? ;)

Also Boydie - your data selection ignores the rather important fact that Hungary was saved from total collapse in October with a $25bn loan from the IMF. Your perception that Poland and Hungary are run in the same way really does need some explanation.

Real Estate / House prices in Poland to drop more or rise again? [228]


And I suppose this rarified elite includes you? :) What exactly makes you think the boom is over forever in Poland? There will be future booms in central London property, a market that is several decades older than anything in Poland.

Real Estate / House prices in Poland to drop more or rise again? [228]


I don't need convincing of anything, least of all that good quality Polish property will do well in the medium term, i.e. over the next 4 years. It's just that you have a particular talent for talking Poland down by picking the data that suits you. Equating Hungary with Poland is a classic example: you talked about GDP and FDI but conveniently forgot about IMF :)

And I think the property I already own is quite sufficient to prove my views re. 2012.

Real Estate / House prices in Poland to drop more or rise again? [228]

WB, I bought one (in Platinum Towers) in Oct 2006 and the other (Murano) in Jul 2007. Both are central Warsaw high end so the market should (I hope) be more robust due to the somewhat lesser dependence on mortgages by the Polish 'elite'.

Maybe - luckily your various cousins will not be buyers of my properties..

Real Estate / House prices in Poland to drop more or rise again? [228]

Quite true WB. Compare Poland's situation with neighbouring Ukraine - a country which is highly corrupt at all levels and hardly has a middle class at all. Property prices in Kiev have gone up more than *10 TIMES* since 2002 leading to quite a few multi million $ flats for sale in the centre. The top earners in Kiev get around $1500 a month. Or rather, they did..

Now that's what I call a bubble.

Real Estate / House prices in Poland to drop more or rise again? [228]

Ozdan, I pretty much agree with most of what you say. We are in a downturn - and Poland will NOT be immune by any means - but, as someone pointed out on another thread, Poland has a strong 'backbone' and will at worst suffer a few broken ribs.

Do you know what proportion of Poles owns investment properties? My guess is its tiny compared to the UK, US or Ireland. The huge increase in city centre apartments can be attributed to the rapid increase in salaries of the upper middle class. Poorer Poles have, unfortunately, not had the same increases - these were the people taking out mortgages they couldn't afford - and we're now going to see the large number of developments aimed at them substantially fall in price.

So you think now is the time to be extremely conservative? Many would disagree and say now (or a few months from now) is the time to be extremely aggressive and buy when everyone else is temporarily broke. That is, buy the best at the lowest price you can haggle.

My point with Ukraine was that it's really fallen off the edge due to a complete disconnection from reality. Poland is not in this situation.

Real Estate / House prices in Poland to drop more or rise again? [228]


In the last 6 months? Who knows. Between now and 2012? I think that's a resounding yes. The population of Warsaw will increase substantially for a whole range of reasons, first and foremost because it's where the highly paid jobs are being and will continue to be created.

Real Estate / House prices in Poland to drop more or rise again? [228]


That's an option, sure. Remember, cashflow management is a different beast entirely from capital gains.

In fact Ozdan it's well worth pointing out the difference between strategy and gambling. A good strategy will help protect you from the consequences of your view not working out.

My *view* is that by 2012 high end central Warsaw flats will achieve an average annual capital appreciation of around 10%. Does this mean I should sell everything I own, get as much mortgage debt as possible and pile into Warsaw property? Clearly not. For a start I have other investments that make much more than 10% annually. And for seconds, diversification by definition smooths out returns long term so that hopefully some things are making you money at exactly the time that others are not.

Real Estate / House prices in Poland to drop more or rise again? [228]

Bolek, do you think Poland's economy will shrink from now till 2012? Then it's you who needs to do some research.

It was always my intention to use profits (whatever they may now be) from the first property to pay for the second. That just sounds like common sense to me. I could afford to own both outright BUT what's the point when you can have 50% of your money in one place and the other 50% in something else?

Real Estate / House prices in Poland to drop more or rise again? [228]

Both of you seem to be forgetting that Poland's growth will be internally driven. There is a EUR 70bn odd cashpile earmarked for this. This amount wouldn't go terribly far in a Western country - such as Britain, where it wouldn't even make a dent in the screwed up banking system - but will in Poland.

And yes, ordinary Polish workers do deserve a better deal than they're getting. This, however, doesn't concern me directly as the property I've bought is for the top 1% of the population. These people, the instigators of economic change, are doing very well and will continue to.

Comparing Japan and Germany with Poland is ridiculous. Both are advanced post industrial nations with very expensive welfare systems to pay for. Poland has a huge amount of domestic development to do before it gets to the level of Southern Europe. The very fact that it currently lacks some of the polish (good roads, top hotels) that Western nations have show that this area will be a significant driver of growth.

Real Estate / House prices in Poland to drop more or rise again? [228]


Luckily sales of high end central Warsaw and Krakow apartments are not dependent on the average Pole struggling to get a mortgage (sorry bolek).

Real Estate / House prices in Poland to drop more or rise again? [228]

Bolek,

What I meant was that high end central places are more sellable because richer Poles can afford to buy without a mortgage.

I'm not one of the Polish business elite - I'm an English guy working as an IT contractor in London for as long as there's still work!

I won't tell you for one moment that Poland won't be affected. BUT I will tell you that it won't be as badly affected as either the western or BRIC nations and will recover far quicker.

1) Poland is not a big commodities exporter.
2) It's a less open economy than many
3) Growth is not fuelled primarily by FDI

Real Estate / House prices in Poland to drop more or rise again? [228]


It depends how long you hold on for Bolek. Maybe you've made a paper loss now, but if you bought anything half decent you should hold onto it for the long term. You can't always expect to 'flip' profitably - there must be a contingency plan.

Actually I don't believe in borrowing money to invest in property. Sure, this leverage can make you money when markets are booming, but the same argument could be applied to the stock market. No one in his right mind will borrow to buy shares, so - why property?

The sole exception to this is the property you buy as your own home. Leverage is justified here as you are essentially not concerned about capital gains.

Real Estate / House prices in Poland to drop more or rise again? [228]

Yes, Bolek, because they were LUCKY. What is the actual difference between borrowing to buy shares and borrowing to buy property?

Oh yes, I forgot - property always goes up..

Real Estate / House prices in Poland to drop more or rise again? [228]

I was being ironic. Property clearly doesn't always go up.