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


I'm having trouble with the math.

Assuming it was a 25 year mortgage paying down to zero, I ran some quick calculations.

To pay down the mortgage by only PLN 100 the interest rate would have to be 24% and they would have to pay PLN 3910 per month.
If the interest rate was 10% they would pay PLN 1772 a month and pay the mortgage down by PLN 1847 in the first year.

Could it be that the payments they were making were going to the fee to arrange the loan first and then to principle?

If you give me their monthly payment and the rate they pay I can run an amortization schedule and make them feel better.

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


ok, understood, it was the exchange rate that killed them

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

Interesting article about the overheated Toronto market - I know this board loves statistics like "61% of the household income".
While the article may indicate that Warsaw is better off than Toronto; one important difference I believe is that the Toronto market is relatively liquid at the various price levels.

theglobeandmail.com/globe-investor/personal-finance/rob-carrick/homebuyers-beware-market-sucker-punch/article2374242

The Toronto market may just cool off on its own. Royal Bank of Canada's latest data on housing affordability shows that mortgage payments, property taxes and utility costs for a standard two-storey home in the city were equal to 61 per cent of the median pre-tax household income at the end of 2011.

Three possible measures have been discussed as ways to slow the housing market:
-Reduce the maximum amortization period back to 25 years from the 30-year option introduced back in 2006, along with a 35-year option that is now defunct.
-Raise the minimum down payment from the current 5 per cent;
-Use tougher stress tests on new mortgage borrowers that would measure their ability to carry mortgages at the higher interest rates we'll see eventually.

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

My comments are directed towards Warsaw, but may be equally applicable to some other key cities.

More likely a combination of both.

Also I suspect where prices fall most, many of us won't want to live.

In the most desireable locations I don't think we will see people willing to sell at lower prices unless they are forced (eg. transferred to another city), even then they may choose to rent out instead.

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


Please don't go attacking McDonalds now, is nothing sacred. Supersize me, one of top misleading films everywhere. It isn’t the healthiest food, but it really isn’t that bad (with the salad instead of the fries).

Regardless, of course if you call a crash, you will eventually be right. I always liked the analogy that even a broken clock is right twice.

Polish real estate is still viewed as attractive to developers/investors (compared to other countries). Of course these leads to the situation of over-supply and an ultimate fall in prices.

As an investor, I wouldn't buy Polish real estate, as a person who wanted to own his own home, I bought.
Milky, I think you would fall into my group, good luck at identifying the bottom (but I agree with waiting for further decreases).
Regarding renting, I rented my first 10 years in Poland - my landlord was absolutely perfect, I actually miss her sometimes. I also substantially reduced the rent over 10 years - she had the attitude that it is better to have a good tenant for less money than a bad tenant or changing tenants or no tenant for more money - but this isn't the common view of landlords in Poland.

If prices did fall by any significant level, there is an enormous amount of money on the sidelines waiting to take advantage of this situation.

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


I can't comment on Ireland, I have no knowledge of this market.

58% drop in Warsaw:
-probably would be healthy
-still above the amount Milky interested in buying at, so his money would stay on the sidelines
-potentially would stop all residential development in Poland, which would lead to a recovery in prices, which would lead to developers developing again - at the end of the day Poland needs more apartments

-unlikely the apartments I would be interested in buying would fall 58%, but the general economy wins
-I still wouldn't be interested in being a landlord (at any price) but likely would create demand from people that want to move out of their 'too small' apartments

One day all the pesimists may be able to say I told you so

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


FYI - Peter is calling for inflation and prices increasing now - recommending gold to hedge inflation

Real Estate / Investing in land in Poland? [7]

A lot of people are interested if the price and location are right.

Can you try to be a little more specific, location, type of land, size of the land, zoning of the land.

If the price/location are bad, then you can probably answer the question yourself.

Real Estate / Thinking of buying an offplan Luxury Property Wroclaw [79]


Freudian slip?

A Freudian slip, also called parapraxis, is an error in speech, memory, or physical action that is interpreted as occurring due to the interference of some unconscious ("dynamically repressed"), subdued wish, conflict, or train of thought. The concept is thus part of classical psychoanalysis.

The 90% price reduction you've been waiting for?

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

Higher interest rates expected to drive real estate prices down
The recent 0.25 percentage point increase in interest rates may mean a slowdown in
lending. That in turn will cause the values of homes and apartments to go down,
analysts, banking experts and developers say. The drop in real estate values may reach
4-10 percent in the next two years, they estimate. Since 2008, i.e. since the collapse of
Lehman Brothers, which affected the real estate sector, the prices of homes and
apartments in the largest 15 cities have dropped by over 14 percent, and in the last 12
months, as analysts from Open Finance point out - by 9.4 percent.
(Dziennik Gazeta Prawna, p.5) AS

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

Considering posts earlier on in the thread I thought the below may be of interest:

Polish emigrants transfer less money to Poland

When in 2007, over 2.2 million Polish citizens lived abroad money transfers from other countries to Poland reached a record level of zł.25 billion a year, which amounted to

2.5 percent of Poland's GDP. However, since then the transfers amount has been declining. Experts from Adam Smith's Center (CAS), who studied the influence of

emigrants' transfers on the Polish economy, say the decline is, for the most part, the consequence of the financial crisis, which impacted the labor market affecting Polish

emigrants especially in Great Britain and Ireland. As a result, in 2008 money transfers from abroad dropped to zł.20.6 billion. "The transfer dynamics have been falling due to

people returning from emigration and families reuniting abroad," says Ireneusz Jabłoński, board member of CAS. In 2011, the value of transfers to Poland is estimated

at zł.17 billion, which constitutes 1.42 percent of the GDP. Experts predict that the amount may remain the same in 2012.
(Parkiet, p.9) AS

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

Record high discounts, demand low
Apartments on the secondary market are selling the slowest in the past three years.
That's despite the fact that owners are lowering prices. An apartment on the secondary
market is listed for an average of 168 days, i.e. close to half a year. That's the longest
since Home Broker launched its market studies in January 2009. In May the listing
time lengthened to 26 days despite additional discounts that became available during
that month. The gap between the transaction and offering price in case of apartments
has increased in the last couple of weeks to 7.2 percent from 4.5 percent in the period
from January to April.
(Rzeczpospolita, p. B1) AS

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

Looking at it quarterly can be misleading as a relatively small number of transactions make up a significant amount of annual volume. Additionally it could be noted that Q1 2012 was 21% higher than Q1 2011. Also at the time they reported this, there was already at least one large transaction I'm aware of for Q3 2012 (see below). I would expect 2012 should be similar to 2011. There are a lot of large value properties under discussion currently; of course they could sell after 1/1/2013 instead of before 31/12/2012, but I predict Q2 2012 is in no way representative of future quarters.

"pbb Deutsche Pfandbriefbank has provided a €65.45 million senior facility to Hines Global REIT for the acquisition of a prime logistics portfolio in Poland. The transaction closed on July 24, 2012. pbb is acting as arranger, sole lender and hedge provider of this financing transaction."

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

[quote=peterweg]The report notes:


Commercial real estate transactions to increase in 2012
The value of transactions on the Polish commercial real estate market will exceed €1billion in the second half of the year, compared to €856 million in the first half of the

year, analysts forecast. This will rank Poland first in Central and Eastern Europe.According to forecasts published on Monday by consulting firm Savills, the value of

transactions on the commercial real estate market will reach between €2 and 2.5 billion and will be comparable to 2011.
Parkiet, Aug.21, p.10, KA

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


Yes, there may be correlation, no this statement is not a true statement.

Dom Development is trading above the 2008 (crisis) levels whereas Gant is trading below the 2008 levels. Gants stock price is a comment on Gant. If Gant and other developers go out of business, I think the effect will likely be a stall or increase in prices. Don't get me wrong, I am a bear on real estate, but as a person involved in the valuation of companies I can't imagine the spreadsheet that would reflect the valuation of Gant and a fall to 2004 prices (I expect Gant and all developers would have a theoretic negative valuation if we assumed 2004 apartment prices, although someone would likely always pay a few grosze for the shares).

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

Will house price downturn continue until autumn 2013?

2012-08-31

Q2 2012 saw continued declines of house prices in all the major cities in Poland in the wake of the rising supply of flats on the market and a limited access to mortgage loans. The price slump is like to continue until the autumn of 2013 at least, according to a report prepared by Centrum AMRON on the basis of data stored in the AMRON and SARFiN systems.

According to the report, prices dropped by 1-3% in Q2 2012. Compared to Q1, the largest decreases were reported in Wroclaw with the average transaction price falling by PLN 182 (€43.5m) to PLN 5,473 (€1,308) per m². In Warsaw, the average home price was PLN 7,407 (€1,770) per m², down by PLN 129 (€31). In Q2 2012, housing prices in Krakow averaged at PLN 6,187 (€1,478) per m², in Poznan – at PLN 5,103 (€1,219), in Gdansk – at PLN 5,397 (€1,289), in Lodz – PLN 3,793 (€906), in the Katowice urban agglomeration – at PLN 3,166 (€756). On an annual basis, the steepest declines were reported in Wroclaw and Lodz with housing prices decreasing by PLN 673 (€161) and PLN 323 (€77), respectively.

The researchers argue that falls in transaction prices are not sufficient to encourage customers to buy flats and seek long-term loans to finance purchases. Falling wages and rising costs of living result in borrowers having a lower credit score, which counterbalances the advantages of decreasing home prices.

Real Estate / Help to buy a flat - for Poland's first time buyers [11]

Poland's lower house of parliament approved the draft law introducing the new state
subsidy program ŇApartments for the Youth.Ó The bill was supported by 258 MPs,
while six were against it and 175 abstained. ŇApartments for the YouthÓ is a program
directed towards married couples and single persons under the age of 35 buying new
apartments. The value of financial support will be 10 percent of the apartment's value
for those who do not have children and 15 percent for those who have with additional
subsidies when more children are born. Subsidies will be granted for up to 50 square
meters of an up to 75-square-meter apartment. Deputy Construction Minister Piotr
Styczeń told members of parliament that in 2014 the government will earmark zł.600
million for the program, then zł.715 million in 2015, zł.730 million in 2016, zł.746
million in 2017 and zł.762 million in 2018.

Real Estate / Help to buy a flat - for Poland's first time buyers [11]

pap.pl - But I don't know where exactly, however you will find it in all the news.

Most important part however is the property can't cost more than PLN 5,944 per meter for Warsaw. Some other links to related news:

The new program in Poland will support the purchase of a first home is compared to the previous two advantages : it increases the creditworthiness and promotes having children .

On Friday, the Parliament passed a law on state aid in the purchase of a first home for young people. The Act will soon be on the agenda of the Senate , and would enter into force in the first quarter of next year.