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Residential real estate values go down in Poland


Wroclaw Boy
10 Jan 2012 #271
In some places yes, but outside investment does not explain the increases in places like Slupsk.

Thats a ripple effect, maybe thats a particularly nice part of Poland i dont know Slupsk very well. Damned hedge funds coming in and buying entire phases of developments off plan is going to have a ripple effect of some kind.

Rural areas of Poland have been relatively unaffected, thats why Poland is not in a bubble as a whole IMO. But take 2008 Rynek property for example in any of the big 7 cities (excuding Warsaw), just madness. I think we can all agree the prices were going insane for a while there.
wielki pan 2 | 250
10 Jan 2012 #272
The flat is 50sqm, in a reasonable area, 4km from centre of a big town. bought in 2001 for 150.000

Assuming that your flat is now worth 350,000zl and thats a big IF... 200,000zl over a 11 year period is nothing to write home about. (I wonder how much the tax man got and other costs not to mention the stress factor)
Foreigner4 12 | 1,769
10 Jan 2012 #273
I am waiting too.

you should be on that list of experts who haven't addressed his post. Aren't bubbles only really open to being defined after they've "popped?"
Harry
10 Jan 2012 #274
" Assuming that your flat is now worth 350,000zl and thats a big IF..."
It's worth what somebody will pay for it. With the word 'somebody' including oneself (for example, if somebody offered me a car identical to mine at the market price and I didn't already have my car, I'd have their arm off, which is why I won't be seeking my car, even though I probably should).
milky 13 | 1,657
10 Jan 2012 #275
I wish I could find a graph like that for Poland... it might be about 10 years behind.

I searched and searched many times, and I can't find a graph on Polish real-estate prices since pre 2005.
WHY?? I guess preventing perspective, is the hidden objective.
Was also hard to find a graph in Ireland before it all went tits up.
pip 10 | 1,661
11 Jan 2012 #276
you should be on that list of experts who haven't addressed his post. Aren't bubbles only really open to being defined after they've "popped?"

I would like to know, how much has the money supply increased by, in Poland since 2003 and are we in an illusionary period of wealth in Poland?

The above is the question everybody is waiting to hear about.

There is no way I would attempt to answer this with any certainty. However, for a while banks were lending with more freely (the whole swiss frank disaster) and many were allowed more credit than they should have. I would say that people are still spending like crazy but it is on credit - they haven't maxed out their credit as of yet. If things don't change I do believe that Poland will take a down turn but at the moment it is not there. There are still foreign investments and because the labour market is generally cheaper over here- the American style recession where so many businesses went bankrupt has yet to happen.

So in my opinion we are in a slight illusionary period of wealth but it is nothing like the U.S experienced.
Wroclaw Boy
11 Jan 2012 #277
WHY?? I guess preventing perspective, is the hidden objective.
Was also hard to find a graph in Ireland before it all went tits up.

Ahh yes the great hide a graph conspiracy, there all in on it.... Milky i think youd have issues finding an article on Viagra.

I know you feel the victim in this Polish property price hike, but when you look at the broad ramifications the losses far out weigh the gains - for the interested parties, only a few truly profited.
cms 9 | 1,271
11 Jan 2012 #278
To answer some of Harry's questions !

The second part of the definition - in this case I presume you mean high volumes. Obviously the defintiion is only a wikipedia one anyway but surely as in most economic statistics it meants a reasonable sample so it does not get distorted by individual bad deals. So anything in the thousands would be enough volume to make judgments on.

If you ask why I pay tax on my rental earnings, then its a simple answer, that I am obeying the law and yes I do often ask the question why I bother when many Poles do not but for example my kids are at state school here and someone needs to pay for that education.

And finally re the bubble issue and intrinsic prices then in your Warsaw example it would still be 14% overpriced in the most liquid market in the country. A rent of PLN 2000 would actually absorb more than half the take home pay of an average Varsovian for living in a very small place - thats actually another worrying sign as disposable incomes will be squeezed.

I am not predicting an 86% fall. If the property is overvalued by 86% then it needs a fall of 47% to return to a corrected intrinsic value (100/186) and that is very feasible. In fact those levels of falls have been seen in Spain, Romania, Ireland and some markets in the US - all places where, like Poland, there was a bubble.

When will it happen ? Well we have our bet for 20% this year and then the other 25% over another 2 or 3 years.

Where does this nonsense idea come from that you cannot spot a bubble until it has popped ? During the dotcom boom in 2000 there were plenty of recorded commentators saying this was a bubble and who refused to invest and who were proved right.
Harry
11 Jan 2012 #279
If you ask why I pay tax on my rental earnings, then its a simple answer, that I am obeying the law and yes I do often ask the question why I bother when many Poles do not but for example my kids are at state school here and someone needs to pay for that education.

But the simple fact remains that very very few people do pay tax on their rental income. I'm currently renting a small flat to use as an office for my one-person company and was today told "No I cannot give you a receipt for the money you pay me. It's because I can't rent this flat out to a company, only to a person who lives here." All the other flats on that floor are either rented as offices or are empty. I told the landlord that I'd be seeking alternative premises and he replied "Well, it would be more risky for me if I rented it to a company. I'd need some extra money to make up for that risk."

And finally re the bubble issue and intrinsic prices then in your Warsaw example it would still be 14% overpriced in the most liquid market in the country.

So it would need to fall by 8.7% to reach the 'correct' value. Hardly a bubble! And not too good for our bet.

A rent of PLN 2000 would actually absorb more than half the take home pay of an average Varsovian for living in a very small place - thats actually another worrying sign as disposable incomes will be squeezed.

Yes, but that has been the rental level for the past decade and a bit, so in real terms they have fallen. And 39m is by no means small for a single person!
Foreigner4 12 | 1,769
12 Jan 2012 #280
Where does this nonsense idea come from that you cannot spot a bubble until it has popped ?

Ok you got me; it just makes it easier:) Perhaps it is more accurate to say, you can't define how big a bubble is until it has popped? Or can you?
Wedle 16 | 496
12 Jan 2012 #281
Well we have our bet for 20% this year and then the other 25% over another 2 or 3 years.

Is your bet PLN-PLN or Euro/GBP/CHF - PLN as the base for write down?
OP peterweg 37 | 2,320
12 Jan 2012 #282
So it would need to fall by 8.7% to reach the 'correct' value. Hardly a bubble! And not too good for our bet.

Its on top of already substantial falls.
Harry
12 Jan 2012 #283
No. The peak price for a place like that would have been 11,000zl / sq. m, maybe 11,500zl at the absolute maximum (as in ask 12,000 and settle for 11,500), so it's down by 13% at the most. Not exactly 'substantial'.
delphiandomine 88 | 18,475
12 Jan 2012 #284
A rent of PLN 2000 would actually absorb more than half the take home pay of an average Varsovian

Isn't the average income in Warsaw now well above 5000zl? I've seen some figures somewhere stating that...
Harry
12 Jan 2012 #285
He does say "take home pay".

Although I would point out that the average Warsaw household has more than one income, a lot closer to two incomes than one.
delphiandomine 88 | 18,475
12 Jan 2012 #286
Although I would point out that the average Warsaw household has more than one income, a lot closer to two incomes than one.

Indeed, it's a common mistake that people make to say "wow, a small place will cost you 1/2 of your income" - when in reality, most people with only one income would be sharing a place anyway.
cms 9 | 1,271
12 Jan 2012 #287
4600 gross is the mazowieckie average. Warsaw itself not sure but Dont think it's over 5000.

You are incorrect about average households have two incomes. Many do but in fact poland job participation is one of the lowest in Europe , only 9m people have paid employment so the average household does not have two full incomes by a long shot.
Harry
12 Jan 2012 #288
" You are incorrect about average households have two incomes. Many do but in fact poland job participation is one of the lowest in Europe , only 9m people have paid employment so the average household does not have two full incomes by a long shot."

a) one of the reasons Poland has such low economic participation rate is that people retire so early. Those people do however have an income.

b) Warsaw has more people who work (with prices here the way they are, people need to work!).
c) I said closer to two than one, not two.
milky 13 | 1,657
12 Jan 2012 #289
Although I would point out that the average Warsaw household has more than one income

But, general advice is that you get a mortgage based on one income, otherwise you could easily fall into deep waters very easy if circumstances change.
Avalon 4 | 1,068
12 Jan 2012 #290
And if an asteroid hits the earth, you will not need a mortgage.
milky 13 | 1,657
12 Jan 2012 #291
You lost me there man.
BRS 2 | 48
13 Jan 2012 #292
every once in a while you can finds something positive (in terms of the lending, all though some on this forum would say only a 5% decrease in 2012 is optomistic thinking):

Bank BGŻ has said it plans to increase mortgage lending by 20-25 percent in 2012. The bank said this increase was compared to the final quarter of 2011, when mortgage lending hit its 2011 peak.

Some of the darker scenarios have projected a fall of 30 percent in mortgage lending in 2012 and of course some banks will tighten their lending practises.

BGŻ deputy president Wojciech Sass told pb.pl that the bank grants about PLN 70-80 million worth of mortgages monthly and will increase this to PLN 100 million this year.

Prices of residential property are seen falling by around 5 percent this year after a 5 percent nationwide decline in 2011.

Weak demand for residential property has been widely muted on the back of tighter credit restrictions, amongst other factors, after a new Financial Supervision Authority recommendation that came into force this month further restricting banks’ lending procedures.(jh)
milky 13 | 1,657
13 Jan 2012 #293
Prices of residential property are seen falling by around 5 percent this year

maybe 4 times that,
cms 9 | 1,271
14 Jan 2012 #294
So with asking prices around 350 k for 50 square metres then that extra 20 million should help about 70 lucky polish families find their dream shoebox. Assuming that they kind find 30 k themselves for the deposit, I mean that's only a years take home salary so should be easy.
delphiandomine 88 | 18,475
14 Jan 2012 #295
So with asking prices around 350 k for 50 square metres then that extra 20 million should help about 70 lucky polish families find their dream shoebox.

What, where?

Even at their highest, 350k would buy you 65-70sqm in an average area in Poznan - an area with good tram connections straight to the centre at that. Nowadays, you'll get closer to 80sqm for that price.

Assuming that they kind find 30 k themselves for the deposit, I mean that's only a years take home salary so should be easy.

So in other words, a newly-wed couple only have to earn 30k for a deposit. Not really difficult - they'll have little expenses and will simply have to cut back on "nice" things for a while - just like newly-wed couples all over the world.
milky 13 | 1,657
14 Jan 2012 #296
So with asking prices around 350 k for 50 square metres then that extra 20 million should help about 70 lucky polish families find their dream shoebox. Assuming that they kind find 30 k themselves for the deposit, I mean that's only a years take home salary so should be easy.

Good points, great to see a rational view point on here.

Not really difficult - they'll have little expenses

easy for you to say but reality it's a major problem.
Avalon 4 | 1,068
14 Jan 2012 #297
Good points, great to see a rational view point on here.

Rational!!! what would you know about "rational". look back over the past three years at your "rational" posts, nothing but old/false links and stupid predictions. What you would like to happen and reality are a long way apart.
milky 13 | 1,657
14 Jan 2012 #298
Well!! CMS seems like a rational guy. To be fair, the situation that is unfolding now, has proven the 'rational' of my argument, and exposed you and Co, to be nothing more than a pack of opportunistic chancers, relying on the sustained naivety of gullible buyers.

From the anger expressed by some here, it looks quite obvious(due to their inability to understand economics) that they have bit off more than they can chew; and those brown stains of failure, on their underpants are growing by the day. This may help:

alibaba.com/product-gs/288390425/Ecomomic_diapers_for_adult.html
thejohnreport.net/wp-content/uploads/2011/09/Michael-Cole-is-an-elephant.gif
delphiandomine 88 | 18,475
14 Jan 2012 #299
To be fair, the situation that is unfolding now, has proven the 'rational' of my argument, and exposed you and Co, to be nothing more than a pack of opportunistic chancers, relying on the sustained naivety of gullible buyers.

All it's really proven is that Mark Biernat will never own a property in Krakow.
Avalon 4 | 1,068
14 Jan 2012 #300
nothing more than a pack of opportunistic chancers,

I suppose that statement applies to anyone who actually works for a living. Get a job and you can afford a flat or house.


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