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Poland's apartment prices continue to fall


milky 13 | 1,657
14 Aug 2011  #211
Dziennik Wschodni (Lublin newspaper) Front page article based on a new survey done by the statistics office. States that The county of Lublin will loose between 20 and 40 % of it population between now and 2035. I in 3 of the population will be over 60..Not a suitable climate for 'people' who think that property prices have bottomed out.
Avalon 4 | 1,068
14 Aug 2011  #212
States that The county of Lublin will loose between 20 and 40 % of it population between now and 2035.

So thats Lublin, do not develop or buy there. That only leaves the rest of Poland. Unless Milky, you are suggesting that of the 38 miilion people left in Poland, 12 million are going to disappear?

Is that another famous prediction?
wielki pan 2 | 250
16 Aug 2011  #213
under australian tax law you get a deduction for interest and other property related expenses on your rental property. ideally works the best if you're on a higher tax bracket.

In Poland negative gearing, well King Sobieski!!! You miss the point, you cannot include business loss with personal income... In Poland homes/apartments are NOT increasing... if you borrow say Zlote 400,000, interest say approx 25,000 zlote, income from property 24,000 zlote, you come out even, but property is no increasing, you still have to pay for repair to property, you still come out at a loss... I make the point that Properties in Poland in the last 2 years have lost a lot of value.
Avalon 4 | 1,068
16 Aug 2011  #214
Hey Milky, These people are lying as well:-

Poland's housing market revived in the first several months of this year. Sales of newly completed apartments and other housing units increased and developers resumed projects they had put on hold after the outbreak of the crisis.

warsawvoice.pl/WVpage/pages/article.php/23747/article
NoInPLnow
16 Aug 2011  #215
It's probably true, but the article clearly highlights that this is from projects that have been put on hold and restarted. This is rather important because it shows that developers are very cautious about the economy.

I think there will be a substantial downturn for Central and Easter Europe in general and will have negative impact on real estate prices. But this is yet to be seen, it all depends how PIIGS will perform. The problem that PL is facing is that exports have declined 10-12 percent from May to June of this year; this can translate into more problems if this situation continues.
milky 13 | 1,657
16 Aug 2011  #216
REAS is an advisory company specializing in issues relating to the residential market. Since 1997, we have been cooperating with developers, banks, investors and other entities operating in the residential market.

The article may as well have been written by Mamdom. You tell people to ignore wikipedia articles about Polish property, and then expect this sh1t to be believed.
OP peterweg 36 | 2,316
16 Aug 2011  #217
Well, they say sales are happening but imply that are at a lower price.
King Sobieski 2 | 716
17 Aug 2011  #218
In Poland negative gearing, well King Sobieski!!! You miss the point, you cannot include business loss with personal income.

i was asking the question, not stating fact.

what are interest rates in poland at the moment?
milky 13 | 1,657
17 Aug 2011  #219
Despite the high supply of new housing units, developers have seen the highest sales since the fourth quarter of 2007. A major part has been played by the government’s Rodzina na swoim (Family in Its Own Home) mortgage subsidies program, which helps people take out loans and buy apartments.

This is market interference. Prices would have dropped naturally other-wise. The brown-envelope brigade at work here.

Tusk recently said in relation to the people(suffering) who took out mortgages in Swiss F. That he would not help these people, as it would be interference with the market.

Bollshit, 'Family in Its Own Home' mortgage subsidies program is absolute interference with the market.
Avalon 4 | 1,068
17 Aug 2011  #220
The people who qualify for this scheme seem happy with it.
milky 13 | 1,657
17 Aug 2011  #221
They know not what they do.
BRS 2 | 48
17 Aug 2011  #222
I've been enjoying this discussion for too long and couldn't resist giving my thoughts any longer.

To give some perspective, I purchased a new apartment in central Warsaw last year KNOWING it will likely drop in value, just a decision I decided to make after renting for so long; I just thought it was time to buy an apartment that I could finish and incorporate features you just won't find in 99.9% of the rental properties.

Regarding the press, even the negative articles seem to be overly optimistic. I espescially enjoy the articles about the so called 'luxury apartments' which is what they call the one I purchased. They definately are not a good investment, I could have rented the apartment I purchased for LESS than the interest I generated on the cash I used.

As interest rates rise, the number of vacant apartment rise, the 5 year period passes (related to taxation of sale of apartments), perpetual usufruct fees are increased (there are huge discrepencies in the rates paid between properties), 'new' apartments age and, god forbid, property taxes are introduced based on the market value of properties, the value of apartments will decrease.

There are of course positives, but I am confident that prices will fall (definately when inflation is considered, but likely ignoring inflation as well).

Do I care? A little, however as long as I am in Poland, if I sell the apartment I would expect to be able to buy a comperable apartment for the proceeds - therefore I would never 'realize' the loss (however wish I would have bought in 2004 when I started looking, although the apartment I bought at the time wasn't even designed yet).

Polsky/Milky will NEVER own anything however, as they have 'dream' expectations. Reality is if prices ever approached the amounts that they suggest the demand for apartments would absorb the apartments in the market.

Postings such as the below are ridiculous:

So about 1700 PLN/sq.m. will be te price at the end of 2011-2012
posted by polsky on Mar.02.2010

However I'm looking forward to the end of 2012 when we can reflect on this posting.

Ultimately I would say I support Polsky/Milky's views, however they are so unrealistic in their expectations they lose all credibility.

My suggestion would be rent, unless you find a 'perfect' apartment and have excess cash, then buy and make yourself happy if you are not concerned with the value dropping.

Now my question to all the posters, when you have cash, what should you do with it? There seem to be few, if any good investment alternatives in any currency, maybe someone would have a different view?
milky 13 | 1,657
17 Aug 2011  #223
I purchased a new apartment in central Warsaw last year KNOWING it will likely drop in value,

Would you bet on a horse with three legs?

Milky will NEVER own anything

I own lots of things including property and land.

Reality is if prices ever approached the amounts that they suggest

I suggested that eventually prices will reflect Polish wages. The current prices are driven by speculation and Poles purchasing from the west.

However I'm looking forward to the end of 2012 when we can reflect on this posting.

I doubt you are.

then buy and make yourself happy if you are not concerned with the value dropping.

That would be ilogical.

when you have cash, what should you do with it?

But property in Ireland, apartment have gone down 'on average' 51%, but you will get for much lower;or just keep your money.
Avalon 4 | 1,068
17 Aug 2011  #224
or Detroit, or Flint in Michigan, anywhere there is no economy will do.
King Sobieski 2 | 716
18 Aug 2011  #225
There are of course positives, but I am confident that prices will fall (definately when inflation is considered, but likely ignoring inflation as well).

did you purchase to have a solid foundation for the foreseeable future? or to try and make a bit of $$$'s in a couple years?

what are the deposit rates or equity market returns in poland?

could you effectively invest the difference between what you would pay in rent versus mortgage payments?
Avalon 4 | 1,068
18 Aug 2011  #226
Ultimately I would say I support Polsky/Milky's views, however they are so unrealistic in their expectations they lose all credibility.

That makes sense?
milky 13 | 1,657
18 Aug 2011  #227
I suggested that eventually prices will reflect Polish wages. The current prices are driven by speculation and Poles purchasing from the west.
However I'm looking forward to the end of 2012 when we can reflect on this posting.

And I answered already ('Av')?????[:}

but I am confident that prices will fall

right you are there
Avalon 4 | 1,068
18 Aug 2011  #228
Ahh, you mean the same way that they have in the UK, where people can't afford a deposit for a place to live as the house prices have not dropped sufficiently for them to be affordable.

The current prices are driven by speculation and Poles purchasing from the west.

I would have thought that they would all be buying properties in Ireland as you say its so cheap there, benefits and cheap housing. Win, win, situation.
milky 13 | 1,657
18 Aug 2011  #229
buying properties in Ireland as you say its so cheap there,

I know some Poles who are buying property in Ireland, but most, want to return home when things improve and prices of property return to normal.
OP peterweg 36 | 2,316
18 Aug 2011  #230
There is no such thing, or the 'normal' price of any item for that matter.

Ahh, you mean the same way that they have in the UK, where people can't afford a deposit for a place to live as the house prices have not dropped sufficiently for them to be affordable.

Yet. They will continue to fall. Inflation is a killer there, wages stagnating, cost of living rising. The adjustment will take several more years, few people seem to grasp the slow nature of a property crash, five to ten years is what it will take.
milky 13 | 1,657
18 Aug 2011  #231
There is no such thing, or the 'normal' price of any item for that matter.

well, less abnormal

Residential real estate prices are struggling in Poland due to oversupply and increased interest rate hikes threaten to hamper demand. Even so, the second quarter experienced robust sales thanks to the lowered prices,(A major part has been played by the government's Rodzina na swoim (Family in Its Own Home) mortgage subsidies program, which helps people take out loans and buy over priced apartments.Without this market interference I wonder how much further they would have(naturally) fallen?)

which are as much as 28% below pre-2008 levels.
Compared to the peak levels seen before the global crisis (between H2 2007 and H1 2008):

House prices in Warsaw were down by 8.8% (-9.4% in real terms)
In Krakow, house prices were down by 8.8% (-10.8% in real terms)
In Lodz, prices have fallen by 15%
In Tri-City, house prices plunged by 21%
In Wroclaw, house prices were down by 28%
In Poznan, property prices plummeted by 29%

nuwireinvestor.com/articles/real-estate-sales-up-prices-down-in-poland-57720.aspx
f stop 25 | 2,513
6 Sep 2011  #232
strange - Warsaw has most unsold homes, but not lowering the prices as much. I wonder who will win - seller or the buyer? ;)
gumishu 11 | 5,012
6 Sep 2011  #233
I have read that Polish developers are getting deeper and deeper in debt - I think the prices will plummet in some year and a half/ 2 years
poland_
6 Sep 2011  #234
House prices in Warsaw were down by 8.8% (-9.4% in real terms)

From the same article:

In Warsaw, the average price of ‘exposed’ units (i.e. already on the market, as opposed to newly-launched) rose slightly by 1.1% (-0.1% in real terms) to PLN 8,353 (€2,112) per sq. m.

In Tri-City, house prices also rose by 2.5% (1.3% in real terms) to PLN 6,663 (€1,685) per sq. m.

So t would seem that people do not want to take the risk with developers, for fear of them going out of business.
OWELL
7 Sep 2011  #235
would have thought that they would all be buying properties in Ireland as you say its so cheap there, benefits and cheap housing. Win, win, situation

The benefit of buying property in Poland is the taxes are not that high as in other EU countries and people can retain the property longer and await for longer time....for some it is after the purchase that they realise thats why not so many apartments like in poland are bought and no one lives in them in other countries...it will happen in Poland also but will take around 15/20 years otherwise all the Polish seniors will be out on the streets
delphiandomine 83 | 17,653
7 Sep 2011  #236
So t would seem that people do not want to take the risk with developers, for fear of them going out of business.

That's exactly what's happening in Poznan - no-one wants to buy new flats, but the 'exposed' units are doing just fine. It's a lot to do with the build quality - anything being offered below 5000zl/sqm is likely to be built on the cheap.
Avalon 4 | 1,068
7 Sep 2011  #237
WBJ. 5th September 2011

"In the upcoming quarters, the company plans to keep stable the number of units it has on offer, which it views as large enough given the present situation on the market, JarosÅ‚aw Szanajca, president of Dom Development’s management board, said at a recent press conference".

"In the near future, construction starts will roughly match the level of apartment sales, with Dom Development expecting to launch construction on at least 600 new units by the end of this year, Mr Szanajca said".

As is the case in the UK, the builders will sit on their landbanks and allow a trickle of new builds to hit the market. This will ensure that prices do not drop below the levels they need to make desired profits. New builds will never be 2000PLNm2 unless wage/material/land prices fall by 50% which seems very unlikely.
hythorn 3 | 580
7 Sep 2011  #238
I have read that Polish developers are getting deeper and deeper in debt - I think the prices will plummet in some year and a half/ 2 years

I have heard this from colleagues in the industry. they are expecting a significant price adjustment.
however they believe that this will not happen until developers start going bankrupt

I am happy to rent for the time being whilst I wait to see what will happen
with the market.

buying property in Poland at the moment can be likened to trying to catch a falling knife
LwowskaKrakow 28 | 431
7 Sep 2011  #239
Besides, unless renting is really expensive like in the UK there is no incentive to buy property : in Poland a long term monthly rent equals to the price of 4 nights at a London or Paris B&B but buying property now in Krakow is more expensive than buying in Montpellier,Toulouse, Berlin, Galway,etc...
PWEI 3 | 612
7 Sep 2011  #240
LwowskaKrakow
in Poland a long term monthly rent equals to the price of 4 nights at a London or Paris B&B

Even in Warsaw 2000zl per month gets you a decent flat in the city centre. If you are stupid enough to spend £106 (i.e. 500zl) on a B&B in London when four-star hotels can be had for half that much, your advice about buying property might not be too valuable.


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