Real Estate / Residential real estate values go down in Poland [455]


I do live here.

92 was the first time I visited, as a student and I stay with some Polish relatives for a few days on edge of Warsaw. There were 3 generations in a flat I would guess to be 50 sqm. It didn't seem to be a lifestyle choice they had made themselves.

Food / Hip flasks in Poland [7]

what town are you in ?

If in Warsaw then there a few hunting shops - one is near the junction of Zurawia and Marszalkowska which has a stuffed badger in the window.

Or for something more expensive you could try Hefra on Mokotowska or there are a couple of Barbour places which might have a mens one.

Work / Chartered accountant from India joining a company in Poland. Cost of living in Poznan? [29]

wondering, your idea has some merit but is very confused.

A CPA is a qualified person - i.e. someone who has passed a tough set of exams and is able to sign certain documents (.e.g an audit or an opinion for a bank). The Polish equivalent is called KIBR. As I said in an earlier post then a newly qualified person with KIBR would start at about 10k and go up to 14k depending on their language skills. German and French speaking KIBRs have strong earning power and career prospects and would not be too keen on preparing accounts for luxembourgeois hairdressers. I think they would also need a practicing certificate for Luxembourg ?

The reason for high rates is because for much of the 90s the Polish KIBR institute was more or less a closed shop with only a handful of people qualifying - in some years literally in single figures. This was changed when Poland went through EU accession but there are still far too few qualified accountants for the size of the market. The process for putting graduates through is also costly and time consuming so only the Big 4 and 5-6 medium firms bother to do that. Some young people also do foreign qualifications - mostly ACCA and are of a reasonable standard but would also want wages of PLN 10k plus.

Masters degrees in accounting are rare and in any case the teaching of accounting in Polish universities is very weak.

What I referred to as accounts clerks getting PLN 3k are not always graduates and not necessarily with English. They are invoice punchers who know a few extra things - mainly VAT rules, social security rules and a basis knowledge of how to prepare financial statements (assuming nothing complex within those statements). In secondary towns you might have some luck recruiting but huge numbers of the ones that do speak foreign languages are being taken by big outsourcing centres.

Real Estate / Residential real estate values go down in Poland [455]

Not sure whether magazine style staging makes a difference and the 8 seconds thing is certainly nonsense but just making it clean and tidy and showing some respect to buyers does make a difference - if that is not done then I do wonder about what other things are wrong with the place.

Might come as a surprize to some but I've bought 4 places here and still have 3. The last time I was properly looking (about 4 years ago) I was amazed that peole did not lock their stupid big dogs up before viewing so that on approach to the house you got scared out your wits and then had some frustrated alsatian following you about for the 20 mins you were there.

Law / Why is US $ getting so high or Polish zloty falling? [60]


Foreigners who paid fair and square for their shares, on the open market.

Its not a positive move for Poland's image among investors as obviously people are now looking at what will be the next part state owned company to get a unilateral tax applied to it.

The govt cannot have it both ways - they wanted to float KGHM in order to generate cash in the 90s, partly in order to modernize its equipment and that entails obligations from their side to play fair.

5% or so would be fine. But 33% ?

Real Estate / Residential real estate values go down in Poland [455]

In commercial property and rents are most decidedly going down in warehouse, industrial and in retail. Not sure about office. Sales prices are also very depressed.

For residential well we keep being told there is a specific definition for "bubble" but if you google "property bubble definition" you get wikipedia and investopedia. If you know of an official definition then maybe supply it ?

I will give one of my own - a developer builds a modest 150 sqm house in a boggy field 15km from the middle of Warsaw with a commute that you would be lucky to do in an hour. He initially decides he wants 350.000 euro for this in a town where the average wage is 12.000 euro per year, i.e. a 25x multiple. After thinking it through he decides he was joking and actually it is now worth 40% less than his original offer. That story is being repeated in hundreds of developments accross Poland at the moment.

Real Estate / Residential real estate values go down in Poland [455]

So what is that definition ? We are lambs in the wilderness in our ignorance. Please help us with the bible.

You can spot a bubble beforenit happens. We have one now and it's going to pop

Real Estate / Residential real estate values go down in Poland [455]


Well that is remarkably close to the wikipedia definition. If Milky were to quote that then no doubt Harry and Delphian would be deriding his dodgy source before segueing into some personal abuse about his family and him being idle.

But I agree its a reasonable way to look at it. Presuming you understand intrinsic value, you will agree that it is the present value of the future cash flows from an asset.

I have 5 properties here of different sizes and location and all would work similarly but lets take one apartment that is easiest to use as an example because the market for selling is more liquid than it is for farming or houses.

The flat is 50sqm, in a reasonable area, 4km from centre of a big town. bought in 2001 for 150.000. I rent it furnished to reliable tenants for 1400 and after tax and costs have about 1100 in my pocket. They are not students so I get rent 12 months round.

So the intrinsic value is the annual income of 13200 divided by a cost of capital that would be something like borrowing costs - growth rate in rents. I havent moved the rent for 3 years and I dont think I could in this market. So that is zero. I have no idea what the cost of borrowing is for inidividuals but with base rates at 4,5% then I guess around 7% once you chuck in mortgage insurance etc.

So intrinsic value is 13.200 / 7% is PLN 188k or 25% appreciation over a 10 year period. Maybe a little low but sounds reasonable. I didnt negotiate especially hard at the time. I have ignored sales taxes, repairs and transaction costs all of which should logically depress the intrinsic value.

A neighbour in the same block has his flat up for sale and want PLN 350k for it. That is circa PLN 7k per sqm and 86% above the intrinsic value. Asking prices for this type of flat are indeed 6-7k per sqm.

Of course you could argue about every assumption in my calculation but the general theory is correct - that relative to intrinsic values then there is a bubble.

Real Estate / Residential real estate values go down in Poland [455]

To answer some of Harry's questions !

The second part of the definition - in this case I presume you mean high volumes. Obviously the defintiion is only a wikipedia one anyway but surely as in most economic statistics it meants a reasonable sample so it does not get distorted by individual bad deals. So anything in the thousands would be enough volume to make judgments on.

If you ask why I pay tax on my rental earnings, then its a simple answer, that I am obeying the law and yes I do often ask the question why I bother when many Poles do not but for example my kids are at state school here and someone needs to pay for that education.

And finally re the bubble issue and intrinsic prices then in your Warsaw example it would still be 14% overpriced in the most liquid market in the country. A rent of PLN 2000 would actually absorb more than half the take home pay of an average Varsovian for living in a very small place - thats actually another worrying sign as disposable incomes will be squeezed.

I am not predicting an 86% fall. If the property is overvalued by 86% then it needs a fall of 47% to return to a corrected intrinsic value (100/186) and that is very feasible. In fact those levels of falls have been seen in Spain, Romania, Ireland and some markets in the US - all places where, like Poland, there was a bubble.

When will it happen ? Well we have our bet for 20% this year and then the other 25% over another 2 or 3 years.

Where does this nonsense idea come from that you cannot spot a bubble until it has popped ? During the dotcom boom in 2000 there were plenty of recorded commentators saying this was a bubble and who refused to invest and who were proved right.

Food / Where to go for the best steak in Warsaw? [77]

OK will give zielna a whirl and report back.

I had the charolais in Intercontinental - maybe overcooked as I asked for it medium but it seemed a bit tasteless.

Food / Where to go for the best steak in Warsaw? [77]

I will also try Adler again but its not really what I'm after as its quite a noisy place and more for beer than for wine. Plus its round shape always made me feel a bit sick !

Real Estate / Residential real estate values go down in Poland [455]

4600 gross is the mazowieckie average. Warsaw itself not sure but Dont think it's over 5000.

You are incorrect about average households have two incomes. Many do but in fact poland job participation is one of the lowest in Europe , only 9m people have paid employment so the average household does not have two full incomes by a long shot.

Real Estate / Residential real estate values go down in Poland [455]

So with asking prices around 350 k for 50 square metres then that extra 20 million should help about 70 lucky polish families find their dream shoebox. Assuming that they kind find 30 k themselves for the deposit, I mean that's only a years take home salary so should be easy.

Real Estate / Residential real estate values go down in Poland [455]


I think you are out of touch with the typcial struggles of a Polish household. In fact if you ask bankers and economists raising a deposit is a major issue - when the banks wanted 10% or sometimes 5% maybe not a problem but if they start to look for say 15% then it will be out of reach for most.

Lets take this mythical couple with 2 full time earnings after tax of 3000 zloty. Assume they live in a flat already and rent at the market rate of 1200. One of them runs a modest car and the other one gets the bus to work. They have cellphones, internet access and the minumum furniture but they do have a fridge, telly, dvd and a few other standard things.

Rent 1200, czynsz and bills 500, internet and phone 250, car loan 250, petrol 600 (say 2,5 tankfuls), parking 150, insurance and car taxes and services 200, bus 150, food (bare minimum 10 zloty a day) would be 620, clothes (bare minimum 100 per month each in order to look smartish for work) 200, toiletries and cleaning plus car fluid etc 200, hire purchase for tv, fridge etc say 200.

Thats already 4200 zloty with no entertainment, no christmas presents, no medicine, no holidays, no decoration in their house, no "essential" unexpected expenditure (weddings, christenings etc), no books, no music etc presume you get the picture.

So they can have no nice things at all and would still need to save every groszek for 16 months in order for a deposit. Throw a child into that equation (which for many is the catalyst for wanting to buying instead of rent and you can surely see it is a huge problem.

Law / IT department (computer programming) - Opening up an Office/Business in Poland [53]

Wroclaw, Poznan, Gdansk and Warsaw would all be OK but why not just outsource ? there are plenty of programming companies in Poland that offer that.

Yes you might pay more but you would have a warranty on the code written, could reduce or increase volumes more easily and someone else would have the hassle of finding and training the programmers. Its a common model in Eastern Europe. Your involvement would be reduced to the odd flight over to make sure they are clear on specificaitons. Obviously you also need to be careful with copyrights etc.

But if you want to set up here then probably best to go to your lawyers and accountants in Germany and ask if they have an associated firm here - many middle size German firms do and then they would have a vested interest in making sure you get looked after.

Food / Where to go for the best steak in Warsaw? [77]

So I tried Downtown again and this time much better - very tasty strip steak (one of the cheaper items on the menu but still 60 zloty). Zielna was fully booked so will try it next time.

Real Estate / Residential real estate values go down in Poland [455]

So we do seem to have some realization that for ordinary Poles then house prices and deposits are out of their reach - remember my 3000x2 couple are actually far richer than the median household. The solution is to move to Srem and also (nonsensically if you are going to live in the sticks) to give up your car.

But giving up your car would entail new costs - for instance access to the cheapest food is in hypers, access to the cheapest furtniture requires visiting out of town places. Add in an extra bus cost (because you would still need that within the town) and is it worth it ?

Moving to Srem (I havent been to the other places you mention) is not like moving to Connecticut or Surrey. Its a potato field with very little cultural life and almost certainly would be seen as a step backwards. Poland will take another generation before those places are livable.

The real answer is that prices in populated places will drop away from their bubble levels in order to be affordable.

The stuff about the housing giveaway is interesting but it is trying to solve a 1989 problem with a 2012 answer. At the time what was the market rate ? Even now it takes about a month to get a bank loan and a notary sorted - try fixing a price when inflation is 250% per year ? How would the state have paid for the upkeep of those buildings if it held onto them ? the state was bankrupt at the time. Why would the newly free Polish state be more entitled to a kamienica in Wroclaw than a previous German owner ? how would people now finance the repurchase of babcia's apartment - the banks do not have that volume of credit to dish out even after 20 years of capitalizm. And surely they would also want deposits so taking that volume of cash out of the rest of the economy would be crippling.

Law / Dying in Poland - Inheritance tax ? [62]

That sounds more like capital gains tax than inheritance tax. Have to say I always thought that there was no iht payable if the deceased is not a polish tax resident and it may be worth you rechecking that with accountants or a proper lawyer as pulawy is just a small tax office and I'm no expert n that. You can still make a claim most likely if it was paid incorrectly. That said I presume you only paid tax of about 4000 quid and an accountant will cost you about 500 euro to write the appropriate letters.

Real Estate / Residential real estate values go down in Poland [455]

This thread is rapidly descending into nonsense but to go back to avalons challenge about affordability. I have no idea where his 45 k figure comes from but maths obviously not a strong suit, nor economics by the look of it.

Average wage is 3000, multiply by 12 and it's 36k. Use an earnings multiple of 3x and it is 108 k. Add a 20 percent deposit and you get to about 130 k.

And that should be about the range that family accomodation starts in smaller towns. In bigger towns add a premium for higher wages and it would be circa pln 170 k in say gdansk and about pln 200 k in Warsaw. That also corresponds with the rent to buy equation I described earlier.

I think developers could make profits at those levels because they were doing so in 2004. Inflation has not been extreme since then but it is clear that developers margins were often 40 percent or more during the boom years. Whenever I meet one they stil normally like to pitch up in an ugly black jeep wearing massive belt buckles so they are probably still getting some margin.

But heaven forbid some of them will have to make a loss on some of their existing stock.

Not sure why the government should offer tax breaks to support the market, other sectors of the economy have to pay full price for their lunch. What the government should do is help the admin process and make it quicker to get permits - that would be win win for residents and developers.

Real Estate / Residential real estate values go down in Poland [455]

As I pointed out before, rather the opposite is true. It is unusual for a polish household to have 2 full Time wage earners. Given that they make up only 23 percent of the population.

And to answer avalon I have showed the typical budget including all costs for a family and the resulting amount they could afford for a mortgage

Banks always look at the major wage earners salary and security of employment. Starting to base that on 2 wage earners is suicidal as the chance of both being stable over the period of a 20 year loan are very low.

I still think the current prices are way overdone. People do not want to live in small towns yet and the commutes door to door are actually far longer than the 45 minutes you talk about.

As for having kids well someone has too, otherwise there is nothing quite look a population decline to reduce house prices long term ! Look at east Germany which people here some are fond of referencing.

Law / Dying in Poland - Inheritance tax ? [62]

Fair enough. Seems you are more up to date than me.

Yes I've been to pulawy, but in 2001. Must make a return trip !

Real Estate / Residential real estate values go down in Poland [455]


Why should the government intervene ? You accuse Milky of being socialist (maybe he is) but then say the government should step in to help one sector of the economy. How is that different to bailing out the banks ?

And what can the government do ?

Allow banks to relax lending criteria or the 20% deposit requirement ? That would be extremely risky and is precisely what started the problems in US, Spain, Ireland etc

Decrease interest rates ? Unlikely when they have lots of bonds they need to sell to cover their deficits and would also damage the zloty.

Housing grants ? Because of the deficit the government needs to cut spending, not increase it and in any case there is fairly credible evidence that the rodzina na swoim cash found its way straight on to developers bottom lines.

The only intervention they should make is to reduce bureaucracy, make permits and zoning easier and reduce transaction taxes if they can afford to do so. I guess they could make a straightforward ban on foreign currency lending but the banks have more or less imposed that anyway.

I think the government probably also wants the housing bubble to deflate slowly so that Poles are able to divert more of their income into other sectors.

Real Estate / Residential real estate values go down in Poland [455]

Why cut VAT - I would love to be able to cut prices to my customers by 23% but I'm not able to and I just accept that as part of doing business here. Why should developers get special treatment ? How many jobs would be created by that and what would be the hit on the governments finances ?

News / Poland now soft-pedalling ACTA signing [107]

Maybe the content companies have got outdated business models but it's difficult in any industry to build a new business model based on giving away your product for free. I don't know much about ACTA and I can't be bothered to learn about it but I'm not sure any media group is making good profits at the moment except iTunes.

Language / Community interpreting/public service interpreting in Poland [13]

I've used one a few times at the tax office but organised and paid for it myself. I had no idea they might pay it for you ?

Real Estate / Poland's apartment prices continue to fall [1844]

I think the "real" fall is 21% - take 2008 as your start point i.e. 100% and if you have a 5% fall and a 3% fall in house prices. = 100 x 1,05 x 1,03 = 1,0815%.

Then apply 3 years compound inflation to get to your real rate = 1,0815 x 1,035 x 1,031 x 1,046 = 121%.

However no point arguing about real falls at the absolute falls are going to be 20% :)

Now we are waiting for Pip to provide her definition of a bubble !


what is the average salary in slupsk ? I cannot be bothered to look it up but I know from my own work that it has a big depopulation problem (about 6% reduction since end of Communism with that 6% being mostly made up of wage earning men in their 20s and 30s) and a high unemployment rate.

Work / Minimum basic salary in Poland [96]

In Warsaw about 5500 gross but the median is much lower

In krakow about 4500 gross at a guess.

Check the gus website for exact figures, there was a long article about it in gazeta wyborcza last week as well

Work / Minimum basic salary in Poland [96]

ifor bach

No, despite the ridicule, she was more or less correct.

Minimum wage is 1.405. Hours per week is 38, there are 4,5 weeks in a month. I think the typical number of hours is 162.

That makes PLN 8,67 gross. Take off deductions and its PLN 6,72 per hour. A supermarket cashier in a soft labour market like Szczecin would not earn more than about 10% above the minumum. I dont think all of those people are lazy, some of them just have lower academic abilities and to a bunch of unpaid overtime probably wouldnt get them much more in life than a pat on the back and a food hamper at christmas.

The minimum wage has just gone up by about 6% though.

Comparing that to an accounting clerk in Poznan does not make sense - for a start 6000 cost to company is 5000 gross and presumably that is for someone with a bit of English ability. That is about right in a town where you are competing with 4 or 5 big outsource centres, each of which might employ 100 such clerks.

Travel / Why does everyone seem to hate LOT Polish Airlines? [380]

They are getting slowly better but far from great.

One thing that does **** me off about Lot is that they never seem to depart or arrive at proper bays. Always on the bus across the tarmac which is cold and tiring either early morning or late evening. I did 10 LOT flights last month and only 2 were in proper landing walkways.