Poland Property Market Review Update
With last week's announcement that Poland plans to bring forward their entry in the Euro currency to 2011 I thought it was worth reviewing quickly the state of the Polish property market.
The Polish property market between 2004 and 2007 was generally recognised as one of the highest growth property markets in Europe (50%+ per annum in some parts).
The combination of low prices, high affordability and good economic climate etc etc that drove this huge price growth is now well known.
As with many property markets that boom such large price growth is usually very unsustainable and often accompanied media hype and unsuspecting buyer piling into the market just as prices reach their zenith.
And so is the case in Poland.
Towards the end of 2007 prices in many of the major cities slowed and moving into 2008 started to go into reverse gear, a trend which has continued month on month throughout the year (between 1.
5% and 4.
5% in August alone).
Prices simply grew too much compared with wage growth leaving affordability too low, thus demand has weakened substantially and sellers/developers are now having to price their properties more realistically (and often accept much lower than the asking price).
Average prices now stand around 8,000 PLN/sqm across the major cities in Poland.
The list below shows the average price of a new build development in August 2008 for each of the major Polish cities in PLN/sqm: Katowice- 7,060 Kraków- 8,464 Aódz- 5,798 Poznan- 9,063 Gdansk- 6,507 Warsaw- 9,070 WrocBaw- 8,065 Warsaw- 8,547 Tri-City- 6,656 Average- 8,091 My view is that these prices will, on average, soften further until the near the end of the year, which is no bad thing and will allow necessary consolidation in the market and allow the market to find its level.
The many of the fundamentals that drove the market between 2004-2007 are still in place.
Thus, once the Polish market has gone through its period of consolidation and whilst demand is still relatively weak (but prices more reasonable) buying opportunities for a mid-long term investment strategy will abound.
With the economy still growing well, wages rising, investment high, infrastructure improving, skills increasing, expected Euro adoption, Euro 2012 football championships, property supply still lower than what is needed in the country (further hampered by archaic plans laws) etc I see the medium term outlook to be quite rosy.
In a few months time it could well be the time to get back into the Polish property market and pick up some real bargains.
The Polish property market between 2004 and 2007 was generally recognised as one of the highest growth property markets in Europe (50%+ per annum in some parts).
The combination of low prices, high affordability and good economic climate etc etc that drove this huge price growth is now well known.
As with many property markets that boom such large price growth is usually very unsustainable and often accompanied media hype and unsuspecting buyer piling into the market just as prices reach their zenith.
And so is the case in Poland.
Towards the end of 2007 prices in many of the major cities slowed and moving into 2008 started to go into reverse gear, a trend which has continued month on month throughout the year (between 1.
5% and 4.
5% in August alone).
Prices simply grew too much compared with wage growth leaving affordability too low, thus demand has weakened substantially and sellers/developers are now having to price their properties more realistically (and often accept much lower than the asking price).
Average prices now stand around 8,000 PLN/sqm across the major cities in Poland.
The list below shows the average price of a new build development in August 2008 for each of the major Polish cities in PLN/sqm: Katowice- 7,060 Kraków- 8,464 Aódz- 5,798 Poznan- 9,063 Gdansk- 6,507 Warsaw- 9,070 WrocBaw- 8,065 Warsaw- 8,547 Tri-City- 6,656 Average- 8,091 My view is that these prices will, on average, soften further until the near the end of the year, which is no bad thing and will allow necessary consolidation in the market and allow the market to find its level.
The many of the fundamentals that drove the market between 2004-2007 are still in place.
Thus, once the Polish market has gone through its period of consolidation and whilst demand is still relatively weak (but prices more reasonable) buying opportunities for a mid-long term investment strategy will abound.
With the economy still growing well, wages rising, investment high, infrastructure improving, skills increasing, expected Euro adoption, Euro 2012 football championships, property supply still lower than what is needed in the country (further hampered by archaic plans laws) etc I see the medium term outlook to be quite rosy.
In a few months time it could well be the time to get back into the Polish property market and pick up some real bargains.
Source...