Hipis
14 May 2012
Real Estate / Poland's apartment prices continue to fall [1844]
Oh please, is this question really necessary? Of course, I know plenty. If you'd bothered to read my post properly you would see that.
The UK property market goes in cycles and not necessarily due to whether there is a recession or not. What tends to happen in the UK is that property prices, when booming, usually outstrip people's ability to borrow the required funds. When I bought my first house I could only borrow 3x my gross earnings but up until a few years ago, before the banking crisis, it wasn't unusual to see lenders offering to lend 6x someone's gross earnings. Now it doesn't take a rocket scientist to work out that it's obvious that lending at the old ratio would have meant that it would have been impossible to sell anything unless the lenders relaxed their criteria, which they duly did thus fuelling a series of unsustainable increases in property values. Another factor was people buying to rent to others which pushed up the value of first time buyer properties beyond what people could afford.
Now as peterweg has pointed out, what is true for the UK isn't necessarily true for Poland but when I see you saying that you can get 2000PLN for such a small place I can only compare it to what I know about the UK property market. 2000PLN equates to £370 on the current exchange rate, someone on minumum wage here in the UK earns around £250 a week which is around 5400PLN a month. What is the average wage in Poland? 1500PLN a month? So you can ask and get 500PLN a month more than someone on average wages can earn in a month. So maybe by looking at some simple economics you can see why I think the sort of property you want to buy and rent out is over priced. Please don't think I am having a go at you personally, I am only responding on this thread because of the example you have given and you are operating in a market created by others. I think you should be given some credit for wanting to renovate the place and furnish it with new products as many landlords would not. I don't want to get into the political arguments about the perceived rights and wrongs of buy to let as I can see the arguments on both sides and there are merits on each side.
Do you know anything about real estate?
Oh please, is this question really necessary? Of course, I know plenty. If you'd bothered to read my post properly you would see that.
The UK property market goes in cycles and not necessarily due to whether there is a recession or not. What tends to happen in the UK is that property prices, when booming, usually outstrip people's ability to borrow the required funds. When I bought my first house I could only borrow 3x my gross earnings but up until a few years ago, before the banking crisis, it wasn't unusual to see lenders offering to lend 6x someone's gross earnings. Now it doesn't take a rocket scientist to work out that it's obvious that lending at the old ratio would have meant that it would have been impossible to sell anything unless the lenders relaxed their criteria, which they duly did thus fuelling a series of unsustainable increases in property values. Another factor was people buying to rent to others which pushed up the value of first time buyer properties beyond what people could afford.
Now as peterweg has pointed out, what is true for the UK isn't necessarily true for Poland but when I see you saying that you can get 2000PLN for such a small place I can only compare it to what I know about the UK property market. 2000PLN equates to £370 on the current exchange rate, someone on minumum wage here in the UK earns around £250 a week which is around 5400PLN a month. What is the average wage in Poland? 1500PLN a month? So you can ask and get 500PLN a month more than someone on average wages can earn in a month. So maybe by looking at some simple economics you can see why I think the sort of property you want to buy and rent out is over priced. Please don't think I am having a go at you personally, I am only responding on this thread because of the example you have given and you are operating in a market created by others. I think you should be given some credit for wanting to renovate the place and furnish it with new products as many landlords would not. I don't want to get into the political arguments about the perceived rights and wrongs of buy to let as I can see the arguments on both sides and there are merits on each side.