Polish real estate market
Polish real estate market is going to crash. Why do I think real estate in the Poland and Eastern Europe will go down? Yes the Polish market will really go down! I have seen it in the US many times. People would say oh it will go down only 10%, like they said in the USA and 50% latter they are wondering what happened. In fact, my landlord in Boston, who was a plumber, is worth 30 million dollars now because he has spend his life buying on low cycles and selling on bubbles. He owns over 100 buildings in Boston all because people did not believed property could fall, so much and then developers were forced to sell when they collapsed to pay off debt. Let me explain why I think this will happen in Poland, a Real estate market collapse. I live in Krakow, Poland. Real estate costs 7000 pln a square meter for a flat in Krakow. The average in the EU is 3000 pln a square meter. Poland does not have the money of other counties.
How to value Polish real estate or any other real estate
Basically the rule of thumb is this. Take the average netto income in any country you live and this is what the cost of a flat should be per square meter. If in Krakow the average is 2000 pln a month. A flat should cost 2000 pln a square meter. Poland has the biggest difference between average wages and prices of flats in the EU. The average person in in the Polish market can only afford a flat with little money down. Speculators are pulling out of the Polish real estate market for greener pastures, i.e. rising price real estate markets, for example Bulgaria and other new land rushes. Now Poland is a hot economy and will stay strong for many reasons, however, the real estate market is a a bubble of ridiculous proportions.
Polish real estate market | how much would you?
In the Polish real estate market, I would not pay more than 2000 pln a square meter. Really. I could build a house in the countryside for that or have a beach front property in Florida for the same price, why would I pay 3.5 times the price for a flat in Krakow?
Bank role in Polish real estate market
Polish banks 1 year ago gave out 110% credit, no money down. Now they require 30% down. Their rejection rate 1 year about was 2 in 10 people, now they reject 8 in 10 people for a loan. I live in a flat in Krakow, Poland that I rent that is 70 meters and valued at 600000 pln. That means I would need 200000pln cash for the down payment.
Polish real estate market liquidity
Are you telling me the average Pole who makes 1800 pln a month has 200000 pln just laying around in cash. What about day to day expense to pay with this 1800 pln a month. This is why I think Real Estate in Poland is going down. I think maybe over 50% of the current value. I will invest in the Polish real estate market, in 1.5 years.
Polish real estate market over supply
With the help of EU money Poland has received lots of help to build new flats. Now those flats are being finished and will be on the market in 2009. This means in the polish real estate market supply is increasing, but where is the population growth? Poland has a flat or a negative population growth. Based on supply and demand the Polish real estate market is going down.
Polish real estate market and Polish standards
Poland is a Western EU country. Everyday it is getting stronger. I am an American living in Krakow and can see that this country is amazing and the economy will continue to get strong. Here is the thing, many of the flats build on the Polish real estate market are 40 meters. or 50 meters. They were built by very greedy developers trying to maximizes their profit, and not caring about standard. They knew the profit point was with many small flats. Yes many new constructions are sold as luxury but they still are 45 meters. Poles are very western and now the new generation are having families, and they so not want 7 people in a 45 meter flat anymore. This is another reason why demand in the over supplied Polish real estate market will be weak. Poles I think now want more room in a house or larger flat if they want a family and will wait a little until they can pay for something bigger than 40 meters.
I am not crying for developers on the Polish real estate market
I do not know about you. But I can not get excited about 40 meters anymore with a family. Further, I am not crying at the highly leveraged Polish and British developers who now are holding empty buildings on the Polish real estate market.
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10 responses to Polish real estate market
‘i live’ not ‘I like in Krakow’
oh for the days in krakow when you could buy for 2000zl stupid me did,nt buy now regreting it,could have had a house podgorze for 3000zl a metre new build to pity about the church bell nearby.i could have bought when i had 300,000zl fat chance now
Tell me about it, I live in Podgorze in Krakow and I can not own a house in Krakow or even a flat as the price is higher than back home in the USA. The Polish real estate market is still too high. When real estate falls to 2500 a meter it will be ok but still not great. And that is 2500 Polish Złoty not dollars or Euro. The price of a meter should be the average monthly wage. In the Polish real estate market that means about 2500.
the Poles are dreamers .
How a flat can cost over in dirty and cold Krakow, than in Cannes south of France ?.
They think money will grows on trees with capitalist.
Do you know why? Because green beautiful Krakow with over 100 churches and more cafes per square meter than anywhere in Europe and the oldest University in Europe (-Czech) and was the center of civilization when western Europe was stone knives and bear skins etc. Krakow is a beautiful Gothic city- Krakow a better place to live than France full of snobs, with riots and crime. However, the Polish real estate market is over priced. Very over priced. But you make a very rude comment, which I deleted that is why I replied so hard to you. What is so great about France? Nothing. Really. It is all hype. Ok you have crime and tourist and riots. I am an American and could live in France but why? Krakow is much nicer. France is all commercial and for tourists. France is richer only because they were imperialists for centuries and when the Germans came they laid down their arms and became Vichy which the Poles never gave up and then had the Russians impose communism. I deleted your other comment but watch out before you attack another group of people.
when in march it is 0 degree celsius in krakow with no sun , in cannes it is 20 degree with big sun and bleue sea.
there are festival of cinema .
why rich people go for holliday in the french riviera ? and not krakow ?.
there is nothing special in krakow , just young foreigner came before just because the girls was easy. that’s all.
venisia , florence , roma , paris , prague , budapest , are 10 time more beautifful than krakow
and krakow is only 750 years old ,there are many other city much older in europe.
sorry but jagiellonsky is not the oldest university in europe
the older is bolognia from italia and after it is paris
krakow is not the most beautiful city in europe , poor infrastructur , too cold , dirty city .
this is the reality .
it is my opinion , if you want think krakow is the top the the world , as you want
and i am sure you live in krakow because you are with polish girl.
polish girls are the only attraction of Poland.
nothing else.
i lived 5 years in krakow , for ………a girl of course not for the weather ahahah
hi lads,
I’ve been working 2 years in Krakow, Poland and I lived in first person the sky rocketing prices of that city. I’ll not make comments about Polish and foreigner speculators trying to squeeze the estate market, I’d simply say that unless there’s a regulation to contrast the speculation, living in Krakow is gonna be a pain for load of people. At the moment, paying a rent is much more cheaper than buying. you cannot cover even the mortgage with the rent, unless you do not take a 20years mortgage. therefore why to buy, if you do not have cash to pay? and even rents are flying high, cuz people want to “invest” and need tenants to pay their mortgage. it’s a spiral i wish could explode.
And well, Krakow is a nice city, people may live there for different reasons. Having a wife is for sure not a wrong one as everybody would like to live with his own partner.
L.
Titus, you hit the nail on the head, In this comment, I am writing more about Krakow but it applies to Poland in general.
Polish real estate developers, housing and property rental and sales agencies and foreign speculators have pushed the market into a bubble. But the good news is every corner of Cracow has new apartments being finished this year and next. In fact so many they prices that they are offering are ridiculous, many times higher than beach front property in Miami for example.
In Poland, blocks of flats are not selling they have to pay the mortgage or land development credit to the banks and prices are coming down. I have heard that real estate is now being auctioned by the banks in Krakow. In fact, in good places like Kazimierz, they are selling for under 4,000 pln a meter, down from 12,000 a meter and still falling, perhaps to 2,000 a meter. This is supply and demand. However, if you walk into any real estate agency in Krakow they tell you prices are going up.
I know real estate agents in Poland personally and they say prices are falling no one is buying. Supply and demand rules over fake hype and greed. So if you do not like the real estate market in Cracow wait and you will see prices go to normal levels, about 2000 pln per meter or better.
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