Krakow Real Estate

The real estate builders in Krakow are the greediest people I know.  Their typical net profit margin is over 100%.  Even in this downturn they are not lowering prices much.  Do you want to work your whole life for some guys fat profit in the Cracow real estate market.  I do not.  And what I write here about Cracow I guess this could be said about the Polish real estate market in general.

Real estate price equilibrium

The price of a flat per meter in most countries in Europe and state in the US equals the salary per month.  So if Krakowians are making 2,300 pln a month the price of a flat in Krakow should be 2,300 per meter.  However, the price is about 7,000 pln per meter.   Why?  Developers are greedy and real estate agents want to create a buzz and tell you it will go up.

Krakow supply and demand

Supply and demand dictates otherwise.  All over Krakow are empty flats and new investments coming on the market that were started two years ago. These flats will stay empty until the prices match the monthly wages.  Real estate agents in Krakow or develops can deny this but this is the law of supply and demand and many will go out of business before they admit the reality of the situation. In fact I have herd developers are taking people’s money then declaring bankruptcy.

Credit market in Poland

Even if the demand was there credit is not.  People need a large down-payment and to make 10,000 pln a month to get credit from a Polish bank, plus take a mortgage in Swiss franc or pay 30% more for Polish złoty.  Banks can make money selling insurance or credit cards to the rich before they enter a risky contract with the average Joe for a mortgage on real estate that might depreciate.

Kraków property

In the US I have seen three such booms and bust in my life time, each time no one can believe it the price will go down.  But it always does.  So if you do not like the price of property in the Krakow real estate market, wait a year.

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