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Buying a flat in Krakow; prices are still falling?


peterweg 37 | 2,320
19 Jul 2010 #31
it buys you 5.6 metres

In the most expensive place in London. 'Close to the centre' as he claimed it would give you 5 times as much space, say 30M.

You should really shut up about people who complain about the ridiculous house prices. 1million zloty for a 67meter apartment in a country where average earning are about 25k is ridiculous. My GF apartment is 67m and its worth 500K.

Thats 20 times earning. Thats a joke. Prices will fall.
Midas 1 | 571
19 Jul 2010 #32
Hate to rain on your parade, boys and girls, but I work in this biz and I'm not betting on the median square meter price of residential in Poland falling by much. 10%? Sure. 20% Possible. "Illusionary bubble bursting" and prices falling waaay down - not gonna happen.

Reasons:

1 ) This country has been fcuked by commies really bad. People used to wait to get a flat for years. As a result, there is still a shortage of residential. Shortage of residential = many desperate young couples tired of living with their mum and dad.

2 ) Comparing earnings to flat/house prices in Poland makes no sense. We are talking about a country where bank mortgages weren't really used up until 2002 or so and mortgage-backed credit was unavailable for a long time. So the price basically depended on what the average Pole managed to squirrel away or earn abroad.

Right now mortgage-backed credit is readily available for your average Pole that is willing to chain himself up to a bank.

3) With the above in mind, please notice a correlation between the sudden availability of mortgage backed credit and the skyrocketing of prices.

Banks decided that your average Polish "burak" is now safe enough a client to lend him helluva dough and have him pay it back thrice over in 40 years. Crazy, i know.

And guess what?

Your average Polish "burak" is gifted with a personality ( some aspects of which have already been discussed ) that won't make him blink twice before chaining himself and the missus to a bank for 40 years.

These are the people you are competing on the market against. They are the reason why an agent for a posh building won't even look at your offers that are "significantly lower" then his asking price. He knows that somewhere down the line a desperate enough "burak" is going to come along.

To summarize:

If You want to buy in Paris - go ahead and buy in Paris. If You want to buy cheap ( prior to 2002 cheap ) - You missed out on the window of opportunity in Poland. So You can either wait until the banks stop lendind the "buraks" money or go buy in Ukraine.
peterweg 37 | 2,320
19 Jul 2010 #33
Most people who work in property are thick as ****, but your assessment of the demand is spot on; there is a shortage of property and especially modern stuff in Poland. Furthermore, even in the boom there were only a relatively small amount of new property built, 170k was one figure versus the many millions built in Spain for example.

Prices will be determined by the availability of credit, but 20% fall is still a big fall.
Midas 1 | 571
19 Jul 2010 #34
Sure it is a big fall. I guess the best way to summarize what I was trying to convey is:

Prices returning to, let's say, pre-2002 levels = not gonna happen unless half the banks that are on the market now close down and move out of Poland or all dramatically change their approach to mortgage backed credits.

In other words, don't count on the prices going down that far.
OP Wawel100 2 | 12
19 Jul 2010 #35
Midas:
Right now mortgage-backed credit is readily available for your average Pole that is willing to chain himself up to a bank.

What would your average pole need to pay per month on a 500K mortgage over 40 years
with 10% deposit?

I was quoated 3,500 per month by DB for a 500K home loan over 25 years. To qualify
for this you have to earn at least 12K (brutto) per month. Also the approval process
for a mortgage is far from simple. Now maybe that's just DB and other banks are more
flexible...but I would imagine the figure would be broadly similar?

In saying that I doubt if prices will fall by much - maybe 10% - certainly not more then 20%.
Midas 1 | 571
19 Jul 2010 #36
Wawel100 - What You've got in Poland at the moment is a gigantic pool of people without credit obligations, if viewed through the lens of Western European standards. So were using ( and most likely will return to using ) all the tricks in the book to get them on the hook. And it is working because the general Polish population's experience with all this is usually zero, nil, zip.

Here's how it goes:

Take it in Swiss franc. Or Euro. It will lower the monthly payment.

30 years. 40 years. 50 years. I'm wondering when they'll start advertising 60 years.

Take it with your mom. Your dad. Your grandma if she's still kicking. Anything to improve that credit score.

With most of the above applied 500.000 is doable if two people are in for it.

Never mind that it doesn't make any sense for them to do so and they'll probably be paying for that flat longer than they'll be married.

They're "buraks", remember?

They don't know better.
milky 13 | 1,657
20 Jul 2010 #37
So the price basically depended on what the average Pole managed to squirrel away or earn abroad.

But there is a gigantic down-turn in the world economy, and those jobs the Poles were making all the cash with are quickly evaporating. I know poles here(Ireland) who are paying their mortgage with social welfare payments because the wages in Poland would not even cover the repayments for their garage. The thing is Poland will have Familys living abroad with their mortgaged home sitting empty as the home wages are futile in relation to the banking reality.

They may end up getting Granny to help with a 60 yr mortgage as they are new to all this and they are getting scammed beyond belief.

He knows that somewhere down the line a desperate enough "burak" is going to come along.

They are desperate but soon or later the prices will eventually reflect the actual wages of the country. The unavailability of property is greatly exaggerated and only helps drive the irrationality of buyers who like you said are new to all this bollsh1t

With the above in mind, please notice a correlation between the sudden availability of mortgage backed credit and the skyrocketing of prices.

I'd say its much less complicated than this,its simply the wages of the buying public are in the west,dont complicate the matter..Also in Ireland we have typical mortgage system since ever and we still made the biggest(property bubble) mess in European history and i can assure you there were no commies here only saints.

You should not talk percentage while discussing a property bubble, you should simplify it to before and after bubble. If you think there is no bubble well then you think too hard the wrong way. If there is a major improvement in the economy in the next 2 years and wages quadruple, well then your prediction of dropping by only 10 or 20% may be true. I dont think you should blame it on the stupidity of the Polish it has to do with external factors light year away from their control. Something will have to give.
Midas 1 | 571
20 Jul 2010 #38
milky - I'm sticking with what I wrote.

1) Pre-2002 ( before the boom, or however you want to call it ) you had pretty much semi-commie prices. None of the global banking players knew which way the country would swing ( think Serbia or Ukraine ) so they were cautious while entering the market.

Once Poland's feet were firmly planted upon the road to EU ( a good indication it will go from "emerging" to "developed" markets in, let's say, 50 years ) banks moved in to make a profit and mortgage backed credit became widely available.

2) So in reality now the average price of a square meter of residential in Poland is effectively determined by how much the bank will lend an average couple of "buraks".

This factor was nearly non-existant during the pre-2002/semi-commie prices period.

Baring Russian invasion or an outbreak of bubonic plague the banks will not pull out of Poland, neither will they completely stop lending money.

Hence the prices are not going down to pre-2002 period.

Heck, if You believe the prices will fall by so much "because they have to", then by all means wait even longer. In the 1980's You were able to buy a hooker in Poland for what it costed to purchase a bottle of Pepsi in Deutschland and a decent flat in Wroclaw = 2 months of vacation work in Canada.

Why not set that as a benchmark and wait until the prices drop that low? :-)

3) Comparing the Polish real estate market with the Irish real estate market makes no point, apples and oranges really. In addition, Poland went through the "crisis" relatively well, when compared to let's say Hungary, Lithuania or Latvia. If I were to hazard a guess where residential real estate prices would drop the most due to economy related reasons I'd rather point my finger in their general direction.

4) Apart from that, a couple of Polish buraks can make that 5-6k zloty net in Poland ( talking Cracow, Warsaw, Tri-City, Wroclaw or Katowice now ) between the two of them right now, throw in the swiss franc and grandpa's pension and they'll get that credit without the help of Ryanair and Irish minimum wage.

Hence this:

the wages of the buying public are in the west,dont complicate the matter..

isn't really applicable.

One of the financial advisors I work with recently brought a plot in a good neighbourhood in one of Poland's bigger cities for about 400.000 zloty. Not a big plot, either. He intends to splash another 400.000 or so on the house. Dude never even seen Dublin, makes most his money off credit commissions.

5) All things considered, You sir sound a bit bitter. I know it would have been great if you came to Cracov in, let's say, 2000-2001, bought 3 100+ meter flats in downtown Cracow for 250.000 ( real prices from Pędzichów street from said period ) and now sold them at 900.000-1 mil a piece.

But that didn't happen and in all honesty, if you're looking for a chance like that You'll prolly be better off looking at Kiev or Belgrade.
delphiandomine 88 | 18,454
20 Jul 2010 #39
5) All things considered, You sir sound a bit bitter.

He is bitter, that's why he keeps posting about it ;)
hague1cmaeron 14 | 1,377
20 Jul 2010 #40
This is not the time to buy.

There was no recession in Poland. And you know that very well you silly fool.
milky 13 | 1,657
20 Jul 2010 #41
Pre-2002

Realistically im talking back to 2005-06 prices not 2002.

So in reality now the average price of a square meter of residential in Poland is effectively determined by how much the bank will lend an average couple of "buraks".

Its determined by how much the worker can afford,banks can asked for only the amount they know they can screw you for,as in what you earn (or depending on where you earn

banks will not pull out of Poland,

why would they??

Comparing the Polish real estate market with the Irish real estate market makes no point, apples and orange

explain??

He is bitter, that's why he keeps posting about it

im not bitter, just like to debate,,i could be wrong, i could be right,however i never attack people on this forum unlike the majority here.

There was no recession in Poland. And you know that very well you silly fool.

The country is f0cked economically and you know it.. How can you have a recession if your country is bordering on poverty..It had nothing to loose ya twat. Im sick of people saying Poland avoided the world recession,such nonsense so did all the African countries avoid the world recession as well.. Stop buying into the spin of Tusk and all those right wing thugs..
peterweg 37 | 2,320
21 Jul 2010 #42
How can you have a recession if your country is bordering on poverty.

What an idiotic comment.

Poverty is living below a certain level of income required for existence in a country. Poland may have low wages but the number of people living below the poverty line isn't much higher than the UK and most of the poor live in three areas of Poland. There is nothing stopping the other 70% of Poland being comparatively rich and having an economic boom or recession.

And in relation to real estate, its Location,Location,Location of course so prices can go ballistic in one town and not another as poverty 100miles away is irrelevant.
milky 13 | 1,657
21 Jul 2010 #43
Saying that Poland avoided the world recession is at billion times more idiotic. I heard that the Republic of Zimbabwe avoided the world recession as well.
peterweg 37 | 2,320
21 Jul 2010 #44
A billion times?

I didn't realise I was talking to a child. Sorry.
Midas 1 | 571
21 Jul 2010 #45
milky -

1 ) I'm sure you can find real bargains in the Republic of Zimbabwe then.

Who knows... 500 years down the road they may actually discover the wheel, which should make real estate prices triple over there.

Sarcasm aside, Poland is a state whose feet are firmly placed on the road which leads from "developing market" to "developed country". In other words, it should look something close to Germany or Holland in 50 years.

Right now we are at the point where everybody noticed it. Appropriate analysts have given the green light and big banking players have moved in. They are willing to lend money to Poles, which in turn should keep the real estate at about where they're at now in the short term ( give and take 20% ). Counting on the "bubble bursting" or however you want to view it is playing the long odds.

Time to make big bucks was 5-8 years ago, because real estate was relatively underpriced in Poland back then and the banks were just moving in.

2 ) Recession - as I pointed out, other countries in Eastern Europe ( pretty much ALL the other countries ) were struck by recession to a degree far greater than Poland ( which actually did not really go through a period of recession as of today ). If You are looking for good deals resulting from the Recession You'll be better off looking there then.

3 ) I have quite a few friends in Blightey or U.S. who became relatively rich through the simple act of buying or inheriting a house/flat and not selling it for 20 years. These friends of mine - some of them aren't really Einsteins to begin with.

With that said I don't know why You keep trying to say Polish people won't have/should not have the same opportunity.
convex 20 | 3,978
21 Jul 2010 #46
3 ) I have quite a few friends in Blightey or U.S. who became relatively rich through the simple act of buying or inheriting a house/flat and not selling it for 20 years. These friends of mine - some of them aren't really Einsteins to begin with.

Right, doesn't that kind of prove that real estate is in an asset bubble? Doesn't take much of an Einstein to see that wages didn't exactly increase in line with general inflation...
peterweg 37 | 2,320
21 Jul 2010 #47
Yes of course its a bubble. Look at the chart here, shows the cycle of boom-bust. The frequency of property bubbles is 18 years - its happened 6 times in the US and UK and the next boom/bust will happen right on time. The same thing will happen in Poland.

housepricecrash.co.uk
convex 20 | 3,978
21 Jul 2010 #48
wages should have been prices in that quote.
art apartments - | 4
10 Sep 2010 #49
I think that prices in centre of Krakow will be at the same level as recently - nothing will change. Of course I do not speak about prices like 25000 PLN per one square meter of some investments. There is still huge demand for renting the apartments so the owners are not interested in selling. There are of the centre is also relatively small so there are not so many apartments like in Podgorze District or Nowa Huta District. So as you have a fine apartment in a nice building you can ask for 8000 to even 14000 PLN per one square meter. The situation on suburbs is completely different. I think that in the nearest future we will see the prices of around 3000 PLN per one square meter of the flat located in old type apartment building constructed from blocks of cement.
milky 13 | 1,657
10 Sep 2010 #50
So as you have a fine apartment in a nice building you can ask for 8000 to even 14000 PLN per one square meter

for 14000 pln it would want to come with one of those star trek Replicators.

The situation on suburbs is completely different.

how much different?
poland_
11 Sep 2010 #51
Right, doesn't that kind of prove that real estate is in an asset bubble? Doesn't take much of an Einstein to see that wages didn't exactly increase in line with general inflation...

Midas is 100% correct. What you guys don't quite follow is that the banks control the real estate market. They are getting it both ends funding the developer and end buyer. Debt to asset is at about 5o% , they can drive that up to 60 maybe even 65%. There are some good offers out there that are 20-30% below 2008 prices. Recently in Warsaw there was a house that went on the market at 1.5 Mln, the other house in the streets around were going for 2-2.5 Mln it was sold within two hours of viewings. Why because they needed money quickly.
bukachino - | 2
14 Nov 2010 #52
This thead is funny. It reminds me of the many conversations I have had with people in Ireland over the past 6 years. I am Irish.

If a property is out of whack with wages, it is overpriced.

People in Ireland were in denial of this for years, and deluded themselves into thinking property prices 10x the average wage were the new reality. After the bubble burst they deluded themselves into thinking property prices 9.5x the average wage were the new reality. They then deluded themselves into thinking property prices 9x the average wage were the new reality. And on and on.

This has been dragging on for 3 - 4 years in Ireland and people are only beginning to wake up to the fact that the average property should be about x3 or x4 the average wage. This means a one bed apartment for 120k EUR in Krakow is total nonsense.

Poland appears to be at the point of denial. Ireland was there about two years ago. Enjoy your painful and long path to reality.

PS I like Poland and Polish people.



Wroclaw Boy
14 Nov 2010 #53
This means a one bed apartment for 120k EUR in Krakow is total nonsense.

Your price above for a 50 m2 flat would equal 9,600 PLN / m2, there are properties for that price in Krakow but they are very rare even back in boom time.

Property in any country is only worth as much as someone is willing to pay for it. There will be some winners and some losers, its all about the timing.
OP Wawel100 2 | 12
14 Nov 2010 #54
Well I also Irish and have first hand experience of the crash. Property prices in Krakow are clearly over-priced relative to salaries but salaries are also particularly low here. Though you can justify the prices if you assume salaries will quickly increase over time.
milky 13 | 1,657
14 Nov 2010 #55
Poland appears to be at the point of denial. Ireland was there about two years ago. Enjoy your painful and long path to reality.

The dogs on the street, know that there is a massive property bubble in Poland.
THERE IS A MASSIVE PROPERTY BUBBLE IN POLAND
delphiandomine 88 | 18,454
14 Nov 2010 #56
Why do you care so much?

Ah, that's right - Poland requires both partners to be working in order to afford a flat!
wildrover 98 | 4,451
14 Nov 2010 #57
THERE IS A MASSIVE PROPERTY BUBBLE IN POLAND

There are massive bubbles in my bath.... Buy a flat now in Krakow....prices are great....for some...??

I just got two really cheap...and a third one free...
milky 13 | 1,657
14 Nov 2010 #58
Why do you care so much?

I don't care, i just know.
So,is there or is there not a

MASSIVE PROPERTY BUBBLE IN POLAND?

YES or NO???????
sousowski - | 2
14 Nov 2010 #59
Yes, the value of property is over estimated, but well, that reflects the expectations from the market. People kept buying more and more expensive and now they would like to have profit. The point is that buyers are not so open to keep on paying more.

I believe the prices will be quite flat for a while. The only thing that may change it would be the bankruptcy of main developers, and this is not probable.

Pozdrawiam
Mark76 - | 20
15 Nov 2010 #60
No

Bought studio flats in Warsaw 6 years ago. Rent I get for one I leases last week is 1700 per month (plus bills)

Yield 7-8% can't see prices falling as the yield would be too attractive.


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