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The current property boom in Poland is a bubble


Wroclaw Boy
25 Jan 2013 #181
weg why dont you learn how to post without insulting people.
poland_
25 Jan 2013 #182
if you wanted some Polish examples then i would suggest the shares of LPP which at the moment cost about 5000 zloty each.

Another of the Gdansk success stories, Poles are fashion obsessed LLP is releasing more Brands and the business model slots into the current times, expansion into new markets. They are hoping and praying Poland will not go into lockdown mode I guess...
pip 10 | 1,661
25 Jan 2013 #183
weg why dont you learn how to post without insulting people.

It isn't possible and I think it makes him feel as though his inaccuracies are correct, which in fact they are not. But that is ok--just don't take any real estate advice from him. Because it is wrong.
Ziemowit 13 | 4,069
25 Jan 2013 #184
There are plenty of bubbles that are visible now ... if you wanted some Polish examples then i would suggest the shares of LPP which at the moment cost about 5000 zloty each.

The soaring price of a share may be, but also may not be a bubble. There were a lot of examples of inflated share prices on the Warsaw Stock Exchange, of which the most famous perhaps was the price of the shares of Universal, the so-called "caesar of speculation", back in the 1990s. But if the rapidly increasing share price matches the rapidly increasing company's profits or vice versa, there is no reason to call it a bubble.
cms 9 | 1,271
25 Jan 2013 #185
Price earnings ratio is 26x. That looks like a bubble to me.
pip 10 | 1,661
25 Jan 2013 #186
a bubble bursts, it doesn't steadily decrease- this is the world wide definition, not mine. we are experiencing a steady decrease, not a burst.
InWroclaw 89 | 1,915
25 Jan 2013 #187
Pip, it may interest you to know that during the dotcom bubble, each time shares fell it was called "A healthy correction" by the so-called experts, who added "It's not a bubble, it's a gentle decline to blow the froth off the market." The rest is history.

The only question in my mind is whether or not the NBP's rate cuts will put a floor in. Probably I'm wrong to draw parallels, but once the UK govt cut rates in 2005, property prices which had been falling took off again, big time.
pip 10 | 1,661
25 Jan 2013 #188
I am well aware of the dot.com phenom. My city in Canada used to house the head offices of all major dot.com corp's until the market crashed. This is not the same thing. Dot.com was a concept and an idea. It was nothing that we could touch. feel, smell or taste. People made millions on the idea of an idea that never panned out.

Real estate is something that we can see. It is not an ideal comparison.

Sorry, but the way people are using the definition of a property bubble is entirely wrong, it may seem trivial but it isn't. It is huge.
Wroclaw Boy
25 Jan 2013 #189
Pip you may not be talking like that if you didnt buy in 2009 - at arguably the height of property prices.
pip 10 | 1,661
25 Jan 2013 #190
we bought our current house in 2010, my husband busted his arse trying to get a discount but the builders would not give us one. The prices in our osiedle have not dropped ever.
poland_
25 Jan 2013 #191
But is it liquid Pip could you sell it for more than you paid for it, have any of your neighbors sold the same house as yours in the last two years.
pawian 170 | 11,336
25 Jan 2013 #192
The prices in our osiedle have not dropped ever.

Housing estate.

d
InWroclaw 89 | 1,915
25 Jan 2013 #193
It was nothing that we could touch. feel, smell or taste. People made millions on the idea of an idea that never panned out.Real estate is something that we can see. It is not an ideal comparison.

Oh boy, if I had a pound for every time I've heard that! :o) The people in the US who saw prices plummet, ditto places in Eire when I was there in 2007, they all said that too.
poland_
25 Jan 2013 #194
height of property prices

in Poland.
youtube.com/watch?feature=player_embedded&v=VWeeTdR7ud8

youtube.com/watch?feature=player_embedded&v=GIRMk8F3YAE
Avalon 4 | 1,068
25 Jan 2013 #195
Real estate is something that we can see. It is not an ideal comparison.

You cannot live in a "share", you can live in a house/flat. At least for the 200 years that Peterweg thinks the communist flats will still be standing.
pip 10 | 1,661
26 Jan 2013 #196
But is it liquid Pip could you sell it for more than you paid for it, have any of your neighbors sold the same house as yours in the last two years.

I live in a new osiedle, the houses have only just been bought.

Pawian, I live in an osiedle that is in an area of Warsaw that has a limit of new construction. We also have a new road, new bike path, new greenery and are always the first to have our lawns mowed and snow plowed. We did our homework and figured out which place would be ideal to buy in Warsaw.

Oh boy, if I had a pound for every time I've heard that! :o) The people in the US who saw prices plummet, ditto places in Eire when I was there in 2007, they all said that too.

Poland is not the same thing. All of these places had existing houses to fall back on- the safety net in Poland was a ***** h*le communist block, Poles do not want to go back on that. Families living in cramped quarters but yet owned their flats outright were able to help younger family members who were first time buyers.

Some of us here get it and many don't. That is ok. But I wouldn't take any real estate advice on those claiming there is a bubble.
pawian 170 | 11,336
26 Jan 2013 #197
Pawian, I live in an osiedle that is in an area of Warsaw that has a limit of new construction. We also have a new road, new bike path, new greenery and are always the first to have our lawns mowed and snow plowed. We did our homework and figured out which place would be ideal to buy in Warsaw.

Oops. I am sorry. I am changing the picture of the osiedle/housing estate then:

s
InWroclaw 89 | 1,915
26 Jan 2013 #198
That is ok. But I wouldn't take any real estate advice on those claiming there is a bubble.

Despite the fact they have already been correct in some cities?

As I see it, the only questionmark now is whether the NBP will do a Mervyn King '05 plus QE plus open more foreign factories which will need housing for imported staff
pip 10 | 1,661
26 Jan 2013 #199
Oops. I am sorry. I am changing the picture of the osiedle/housing estate then:

which means what exactly? It doesn't look like that either. We are next to farm land.
Besides, how many Poles would love to live in an area that looked like that as opposed to what they live in now?
poland_
26 Jan 2013 #200
Oops. I am sorry. I am changing the picture of the osiedle/housing estate then:

Then maybe change to pictures of Osiedle in the area PIP lives.
konstancja.pl/pl/gallery/faza-v/1

I am not suggesting this is Pips house although this type of dwelling typifies the houses in the vicinity Pip is located.
pip 10 | 1,661
26 Jan 2013 #201
I would never live in Konstancja!! but you are right about the look. Konstancja has dropped their prices considerably--they were even offering a free mini cooper at one point.
Wroclaw Boy
26 Jan 2013 #202
Then maybe change to pictures of Osiedle in the area PIP lives.

They remind me of one of my biggest property regrets in Poland. When we first arrived in early 2006 we saw the below houses at phase development stage, the asking prices for these semi detached houses was around 350,000 PLN, black finish, great build quality, nice part of town. You could have easily doubled your money in less than two years if you sold at the right time.

One thing led to another and this investment got sidelined, hindsight is a wonderful thing, but it was pretty obvious they would be a great investment. I wonder how much they are worth today...... about 1,100,000 PLN i should think.


  • address is in the image
InWroclaw 89 | 1,915
26 Jan 2013 #203
about 1,100,000 PLN i should think.

900K perhaps
taakidom.pl/adv/show/sprzedam/dom/dolnoslaskie/2724045.html

But does that not suggest a bubble? Or have incomes increased 2.5x since 2006? Some would argue it was already expensive in 2006 ay 350K when Polish salaries were something like 6K a year on average I estimate. Where does it end if salaries don't keep up?
Wroclaw Boy
26 Jan 2013 #204
900K perhaps

Those are the town houses nearby, the semis will be worth a bit more i reckon, although if i remember rightly they are a bit smaller.

Do you know the area? does it still have a bottle neck traffic problem near the racecourse, when you turn off or onto ? that was definitely a negative.
poland_
26 Jan 2013 #205
hindsight is a wonderful thing

I am not so familiar real estate in Wro so I can't comment, they look the part in the picture. I read a recent survey about private Polish investors, number 1 on their list was living in an exclusive building or Osiedle, number 2- high end Car. Number 3 - foreign holidays. Number 4 - Children private school.

I would expect in the UK it would be first house and then education. Poles are still very showy and wear it on their sleeves, this will change in the future- they need a good recession to recreate value.
InWroclaw 89 | 1,915
26 Jan 2013 #206
Do you know the area? does it still have a bottle neck traffic problem near the racecourse, when you turn off or onto ? that was definitely a negative.

Yes it does, and now or recently there are roadworks nearby still. Chaos at times. Also just 2 buses - 113 and 612 which are fairly infrequent.
pip 10 | 1,661
26 Jan 2013 #207
an exclusive building or Osiedle, number 2- high end Car. Number 3 - foreign holidays. Number 4 - Children private school.

I would expect in the UK it would be first house and then education. Poles are still very showy and wear it on their sleeves, this will change in the future- they need a good recession to recreate value.

so true. Poland is experiencing the mass consumerism that happened in the rest of the world in the 80's. I often get into conversations with some of my husbands friends who feel the need to drive the biggest most gas consuming cars and have name brand everything. Their logic is that they have never had it before so now it is Poland's turn.

In my opinion it is so hedonistic and the desire for all the "stuff" never ends. We have a nice house and our kids go to a good school- this is what is important in my little world. All the other stuff doesn't matter to us. We don't drive big fancy cars and our holidays are spent with friends and family, not getting drunk on a beach in Turkey with other Poles. Most of our income goes into savings....which I know doesn't happen here.
poland_
26 Jan 2013 #208
I would never live in Konstancja!! but you are right about the look. Konstancja has dropped their prices considerably--they were even offering a free mini cooper at one point.

When I dealt with GTC it was at the end of Phase 1, Phase 1 is the red brick houses, we where thinking of going with one of houses at the back of Phase1 they had built 8 houses in a horseshoe all above 400m2. My wife was not fully sold so we started to look at Phase 2 as one of the first people. If I recall the houses where about 300 m2 +/- and the gardens around 800m2. So the big question was House or apartments in the center, we opted for the second choice and it proved to be the wiser.

Pip if I recall the prices back in the day, 280-300,000 $ USD when the $/PLN was about 4.20.
What are the house price now?
pip 10 | 1,661
26 Jan 2013 #209
the resales are going for 8,000 to 12,000 pln m2. I am not exactly sure of the new ones, but my husband thinks around 2,5 pln for the smallest model. I think they would offer a good income for expats who want to be in that community. I didn't like the elitist vibes they give off but the houses are pretty nice. No basements though.
poland_
26 Jan 2013 #210
Polish retail sales declined at an annual rate of 2.5% in December 2012, on a 15.1% monthly growth from November levels, the Central Statistical Office (GUS) said.
The December figure surprised market on the downside as it was well below market expectations of 1.3% y/y. Such a low figure indicates very weak domestic demand as for last few months real wage growth has been in red.


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