Current state of the property market in Krakow

andy b:

Sorry, but this is incorrect. May have been true a year or two ago, but right now there are no greener pastures. The fact is, there are gathering stormclouds on the economic horizon in many CEE countries - Hungary, Baltic States, Romania, Bulgaria. Poland has a much healthier economy thank these countries, and it could be regarded as somewhat of a safehaven in the region.
You can read a very interesting article from the Economist here about the region:

andy b:

OK, I am an agent in Krakow and also assist foreigners to get mortgages in Poland.
I am biased, no doubt about it.
But no-one intelligent is going to believe your assertion that prices will fall by 50% in Krakow based on these 'facts' you have come up with.
No European property markets are looking healthy at the moment, and you dont need me to tell you why. Having said that though, the fundaments of the Polish economy remain strong, and there is still strong demand from Polish buyers. There is a wait and see approach from buyers at present, which is fair enough. But I can see that when good properties come on to the market at realistic prices, there are buyers for them. I know this from recent experience.

Guest	Oct 3, 08, 11:12 / #
Given the global credit crunch crisis, what is the current state of the property market in Krakow. Is property still actively being bought and sold.

krkPrincessThreads: - Posts: 15 Joined: Sep 28, 08	Oct 5, 08, 15:36 / #
Property values have gone up tremendously, the city is growing.

dtaylorThreads: 15 Posts: 992 Joined: Sep 15, 07	Oct 5, 08, 15:39 / #
Yeah the boom is still going on here, as i've been fighting with the 1000's of pesky students in the market:)

sausageThreads: 25 Posts: 1,053 Joined: Sep 21, 07	Oct 5, 08, 15:41 / #
dtaylor: Yeah the boom is still going on here Do you think there will be some sort of "adjustment" and a minor dip in prices in the forseeable future?

ozdanThreads: 11 Posts: 70 Joined: Jan 18, 08	Oct 13, 08, 19:06 / #
The key to your question is the word "Global" and whether or not you consider poland to be linked to the worlds economies. In the USA there are houses in some areas of cleveland which are being passed in with a reserve of $1000. And i don't just mean one or two. In Krakow prices close to the center are comparable to that of my hometown, in melbourne australia. Australia has a GDP of almost twice that of poland (granted it also has half the population). Australian property prices are considered high on global standards. In my opinion it depends on polands reliance on the rest of europe - If the polish economy relies heavily on the economies of the rest of europe then you can most certainly expect a drop. I'd be concerned for anyone buying real estate in a "booming" market anywhere in the world right now... especially one that has trippled in 3 years. Beware of anyone who is involved in this industry continuing to create hype.. Real estate agents, mortgage brokers, banks, property owners, property developers.. because it is with these people that the problem in the USA began.

SeanBMThreads: 41 Posts: 8,727 Joined: Mar 10, 08	Edited by: SeanBM Oct 13, 08, 19:30 / #
Things are going well here. But I recommend that if you are going to buy, find something in London, for example, buy low sell high.

peterweg1	Oct 23, 08, 14:11 / #
Sean Prices in London have a long way to fall. The biggest problem Poland has is the number of foreign currency denominated loans (something like over 50% of all business and personal loans). Because of the rapid rise of the Yen and Swiss Franc these loans are suddenly much more expensive. This is why Hungary has has such a crash it has 90% foreign currency loans. This factor plus the usual asset bubble/crash will mean prices in Poland will fall - a lot. Another issue is that, world wide, all credit is being sucked in, assets are being cashed out to payback the failing hedge funds.

Grzegorz_Threads: 81 Posts: 6,213 Joined: Nov 16, 06	Oct 23, 08, 14:36 / #
True. Looks like the whole market may crash soon.

ozdanThreads: 11 Posts: 70 Joined: Jan 18, 08	Oct 23, 08, 21:01 / #
Plenty of people are of the mind that a boom is always followed by a bust. It all just depends on how big the bust is. But this generally relates to the size of the boom. Which in terms of poland has been bigger than any other part of europe in the last few years. peter is right. You talk to a lot of locals who have bought in recent years and a large portion of them have borrowed in the swiss franc. In other parts of the world this practice of borrowing in a different currency, highly leveraged to buy real estate wouldn't even be considered due to it's extreme exposure to risk. Betting on currency is a big gamble and I'm surprised the banks would even offer these sorts of loans to unsophisticated investors. But in a boom time everyone is optimistic. The optimisim still seems to be high in poland, but if this turns it could be bad. If a lot of people bought recently and are hovering around the top, highly leveraged, then a small drop is all it will take to start the slide. If you're in it for the long term and you're not highly leveraged, then you're fine, if you are highly leveraged then its time to start thinking a bit more conservatively.

mbiernatThreads: 3 Posts: 116 Joined: Sep 24, 08	Oct 24, 08, 03:36 / #
I was about to post to this as its close to me as I live in Krakow but my blog tells it better. http://www.claritaslux.com/blog/polish-real-estate-market/ I think the market will go down over 50%.

ash1972Threads: 3 Posts: 93 Joined: Oct 22, 08	Oct 24, 08, 06:09 / #
Total mortgage lending in Poland is less than 10% of GDP as opposed to the UK's 100%. The UK is officially in recession yet economic growth in Poland is strongly positive. Even property in the UK is estimated to fall by about a third over the next couple of years - not 50%. Inward migration into the larger Polish cities is high. Plus, Poles are returning home from the UK to avoid our recession. That goes for Ireland and other parts of W Europe too. Do you really think prices falling by 50% in Poland has any connection with reality? For the lower quality/poorly located developments, there will be some price falls. For more desirable developments - not likely.

Wroclaw Boy	Edited by: Wroclaw Boy Oct 24, 08, 06:19 / #
BREAKING NEWS I have been informed recently by an incredibly reliable source that one of the major Polish based mortgage lenders is in real danger of going into administration. The source says the bank will collapse if a rescue package is not in place by early next year. They have basically ceased lending under new strict laws. They will only discuss mortgages if a client has 35% deposit and even then the chances are very slim. Most of their mortgages were denominated in foreign currencies ofcourse.

ash1972Threads: 3 Posts: 93 Joined: Oct 22, 08	Oct 24, 08, 06:44 / #
Did this incredibly reliable source tell you the name of the lender that's about to go into administration?

Wroclaw Boy	Edited by: Wroclaw Boy Oct 24, 08, 06:46 / #
ash1972: Did this incredibly reliable source tell you the name of the lender that's about to go into administration? He sure did, probably not best to tell at the moment I dont want to install panic. All i can tell you its not one of the large high street banks.

SeanBMThreads: 41 Posts: 8,727 Joined: Mar 10, 08	Oct 24, 08, 06:19 / #
ash1972, Agreed. I have read the posts on here and other similar threads and links and although I think some of the people on here do give sound observations and advise, I can't help but think others are not clued in. I think it would help if people are to give their analysis they should be accountable and explain where they are and what is there occupation and their vested interest in what they say.

andy bThreads: 7 Posts: 195 Joined: Nov 26, 07	Oct 24, 08, 08:16 / #
I was about to post to this as its close to me as I live in Krakow but my blog tells it better. http://www.claritaslux.com/blog/polish-real-estate-market/ I have to say that there are many very dubious "facts" reported in your blog concerning the Polish real estate market. "Real estate costs 7000 pln a square meter for a flat in Krakow. The average in the EU is 3000 pln a square meter." I don't dispute the average price for Krakow, but you really think this is accurate for the EU? Give me a break. "Speculators are pulling out of the Polish real estate market for greener pastures, ie rising price real estate markets, for example Bulgaria and other new land rushes" Sorry, but this is incorrect. May have been true a year or two ago, but right now there are no greener pastures. The fact is, there are gathering stormclouds on the economic horizon in many CEE countries - Hungary, Baltic States, Romania, Bulgaria. Poland has a much healthier economy thank these countries, and it could be regarded as somewhat of a safehaven in the region. You can read a very interesting article from the Economist here about the region: http://www.economist.com/world/europe/displayStory.cfm?source=hptextfe ature&story_id=12465279 "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?" Rubbish. Did you factor in the cost of buying the land to build your house on? And you are building it yourself? Good luck getting a house on the beach front in Florida for $700 USD per m2. Property may be depressed in the USA, but not that much. "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." Again, this is incorrect information. We are still dealing with banks who will loan up to 90% LTV, and that is to Poles and foreingers. You are presenting your opinion as facts which is very misleading. OK, I am an agent in Krakow and also assist foreigners to get mortgages in Poland. I am biased, no doubt about it. But no-one intelligent is going to believe your assertion that prices will fall by 50% in Krakow based on these 'facts' you have come up with. No European property markets are looking healthy at the moment, and you dont need me to tell you why. Having said that though, the fundaments of the Polish economy remain strong, and there is still strong demand from Polish buyers. There is a wait and see approach from buyers at present, which is fair enough. But I can see that when good properties come on to the market at realistic prices, there are buyers for them. I know this from recent experience.

isaThreads: 13 Posts: 43 Joined: Oct 22, 08	Oct 25, 08, 13:05 / #
andy b: Good luck getting a house on the beach front in Florida for $700 USD per m2. Property may be depressed in the USA, but not that much. While I cannot speak for the current housing market in Krakow, as a resident of Florida, I can tell you that Yes, you can purchase a waterview (if not waterfront) property for even less than $700 m2 (to be exact $50 per sf)...

SeanBMThreads: 41 Posts: 8,727 Joined: Mar 10, 08	Oct 25, 08, 13:10 / #
isa: (to be exact $50 per sf)... what is that by M2?

mbiernatThreads: 3 Posts: 116 Joined: Sep 24, 08	Oct 26, 08, 03:45 / #
It will fall. I have seen it in the USA and Polish people and agents say 10% but that is not true. It will fall 50% based on supply and demand and a credit freezes. People told me last year that the Polish stock market is immune or might fall 10% - it has fallen 50%. Do not believe 10%. I have seen this happen in the state many time. I would buy a flat in Krakow for 1800 pln a meter. If not I would buy a house in Florida on the beach. I know I am from Boston and my folks live in Florida and you can buy very cheap houses with land for the price of a 50 meter flat in Krakow. In Maine you can buy a castle for the price of a 45 meter block in Krakow. Polish prices will fall at least 50% and agents are upset at this fact but it is true.

SeanBMThreads: 41 Posts: 8,727 Joined: Mar 10, 08	Edited by: SeanBM Oct 26, 08, 03:56 / #
mbiernat: People told me last year that the Polish stock market is immune or might fall 10% - it has fallen 50%. You are saying it has fallen, it has not and probably will not, it is completely unrealistic. mbiernat: I would buy a flat in Krakow for 1800 pln a meter. Where in Krakow? Do you know what you are talking about? or are you just giving us the American equivalent? You must be because it'd be impossible to find something that cheap. Have you been to Poland and been involved in real estate here?. I doubt it, perhaps you ought to research it. If you know something and want to talk about American real estate, sure by all means, I would be interested to hear what it is like on the ground over there. If I can, I would like to point out that when you are home and it is snowing, you generally think it is snowing everywhere But it isn't :)

Wroclaw Boy	Edited by: Wroclaw Boy Oct 26, 08, 04:04 / #
mbiernat: I know I am from Boston and my folks live in Florida and you can buy very cheap houses with land for the price of a 50 meter flat in Krakow. But lets not forget build quality in the US! Those fantastic looking Floridian villa complexes with large clubhouses and swimming pools look great for about 2 years. After that they crumble and look tatty add a couple of hurricanes and there totally wiped out. Not worth the ground there built on. Not too mention oversupply, who wants to live in Florida anyway. If youre going to compare the property market in Krakow with that of the US you really need to look at the relevant comparison state side, that would probably be New York.

SeanBMThreads: 41 Posts: 8,727 Joined: Mar 10, 08	Oct 26, 08, 04:12 / #
Wroclaw Boy: Floridian villa complexes with large clubhouses and swimming pools look great for about 2 years. But what a great two years, ha ha ha Have you considered buying over there WB? There is a high maintenance bill there. Wroclaw Boy: who wants to live in Florida anyway. Old people, and disney world, MGM studios, sea world etc are good for a laugh but not enough to make me want to move there. I doubt if you can let it out but I do not know. Wroclaw Boy: comparison state side, that would probably be New York. What's it like there?

Wroclaw Boy	Edited by: Wroclaw Boy Oct 26, 08, 04:23 / #
SeanBM: But what a great two years, ha ha ha There is a high maintenance bill there. I sold Florida real estate for three years all based around Disney World, we had plenty of business and made decent money. In 2003 the market exploded and Brits were cueing up to buy property there mostly financed from equity gained in the UK. It was the perfect example of a false market, a huge property bubble. Not many within the industry realised this at the time. SeanBM: Have you considered buying over there WB? I did but decided against the idea, i actually wanted to invest in bulagria at the time when ski chalets in Bansko were around £20k. SeanBM: What's it like there? Dont really know although I would imagine on par with London. Whats the $700/m2 beach front property mentioned above - A trailer park?

eleanoroconnerThreads: 4 Posts: 58 Joined: Nov 8, 07	Oct 26, 08, 05:00 / #
I've got to say the doomsayers on this thread have very little to back up their arguments. Krakow, and indeed all of Poland, is a very stable market compared to anywhere else at the moment. andy b: "Real estate costs 7000 pln a square meter for a flat in Krakow. The average in the EU is 3000 pln a square meter." Even if this EU figure was true (and noone knows where it came from...) prices in all cities are higher than the average whatever country you live in. More people want to live in cities. andy b: Speculators are pulling out of the Polish real estate market for greener pastures, ie rising price real estate markets, for example Bulgaria and other new land rushes No. Speculators are pulling out of Bulgaria because the only people they can sell to are other foreigners and they are all too cash strapped to buy! andy b: We are still dealing with banks who will loan up to 90% LTV, and that is to Poles and foreingers. This is true but what andy b didn't say is it has always been difficult to get this money. You have to jump through so many hoops its unbelievable but for that reason there are very few high risk borrowers in Poland. mbiernat: It will fall 50% based on supply and demand and a credit freezes. If you want to use supply and demand for your argument then the outcome is as follows. Poland has about 320 dwellings per 1,000 people. Britian has 420 and Bulgaria has 470. In fact Poland is at the bottom of the table which means supply is very low. The economy is growing and wages are rising so there is your demand. There is no credit freeze. Getting money from Polish banks has always been like getting blood out of a stone. Finally Poles are migrating to the cities so even more demand. Conclusion. Based on supply and demand prices will rise. mbiernat: my folks live in Florida and you can buy very cheap houses with land for the price of a 50 meter flat These comparisons - and everybody seems to be using them - are absolute rubbish. There is a whole farm with land for sale in Scotland for 30,000 GBP - if you want to live on the Orkney Islands!!! Saying "Krakow is overvalued because a studio flat costs the same as a farm in Scotland so Krakow prices must come down" or comparing Florida or whatever is just utter rubbish. Not enough people want to live in Florida so prices are coming down. More and more people want to live in Krakow to prices are going up. Maybe someone else can find the world's cheapest property/mud hut and use that to conclude Krakow prices are OTT. SeanBM: I think it would help if people are to give their analysis they should be accountable and explain where they are and what is there occupation and their vested interest in what they say. Fair enough Sean. I am a financial advisor (not for Poland) and I am steadily building up a Polish portfolio for myself. The current financial crises makes me believe even more I'm doing the right thing. I was in Krakow and Wroclaw about two weeks ago looking at new builds already completed and have to say the sites were swarming with Polish buyers - keeps me confident!

Guest	Oct 26, 08, 05:08 / #
andy b: Sorry, but this is incorrect. May have been true a year or two ago, but right now there are no greener pastures. The fact is, there are gathering stormclouds on the economic horizon in many CEE countries - Hungary, Baltic States, Romania, Bulgaria. Poland has a much healthier economy thank these countries, and it could be regarded as somewhat of a safehaven in the region. You can read a very interesting article from the Economist here about the region: I wouldnt pay much attention to the 'Economist' That publication singled out Ireland two years a go as the best country in the love to live in. Ignoring the fact that we have one of the worst public health systems in Europe, we were coming to the end of a property bubble and a recession and mass unemployment was beginning to take toll. We all knew here that the property market was going to collapse and with it the economy, Poland in many regards is a carbon copy of Ireland. andy b: OK, I am an agent in Krakow and also assist foreigners to get mortgages in Poland. I am biased, no doubt about it. But no-one intelligent is going to believe your assertion that prices will fall by 50% in Krakow based on these 'facts' you have come up with. No European property markets are looking healthy at the moment, and you dont need me to tell you why. Having said that though, the fundaments of the Polish economy remain strong, and there is still strong demand from Polish buyers. There is a wait and see approach from buyers at present, which is fair enough. But I can see that when good properties come on to the market at realistic prices, there are buyers for them. I know this from recent experience. Ireland a few short years ago had one of the best economies in the world, far healthier than Polands and we experienced similar growth in the housing sector. Noboy 'intelligent' would have believed Irish house prices would fall by 50/70% either, but they are now expected to fall close to that amount until the market bottoms out. The simple fact is, most property bubbles continue for a 10 yr cycle and burst. How the landing will be after that burst, be it soft or hard depends on the structures in place by the goverment and the strength of the economy itself. Poland's housing bubble will of course collapse, as it has done here. More credit means more home ownership, consumer confidence, foreign economc investment, all will continue to push prices up there. When you see banks throwing money at people, or even the mention of 90 / 100% you can be sure Poland is in for very difficult times ahead. House prices in Poland arent a reflection of the market, they are way overpriced and that cant be sustained, thus people will be left with a lot of negative equity, tie that up when the inevitable world recession has a knock on effect there....well easy to comprehend. Im moving to krakow soon to be with my girlfriend. Everywhere I look there are new houses and evelopments being built, most on the back of heavy credt from thye bank. Poland is the new Ireland, and will have the same end inevitable result. I would guess that house prices there will begin to fall in the next couple of years and will bottom out sometime around 2011, so if I was to build a house it would be then andy b: OK, I am an agent in Krakow and also assist foreigners to get mortgages in Poland. I am biased, no doubt about it Exactly, and I appreciate that andy b: Having said that though, the fundaments of the Polish economy remain strong, and there is still strong demand from Polish buyers The privatization of small and medium state owned companies and a liberal law on establishing new firms and the the ability to attract foreign multinationals, has been the main drive for Poland's economic growth. That growth while relatively strong at the moment due to low labor costs and tax incentives can not be sustained forever. There are a lot of challenges ahead, and while Polands economy is healthy at the moment, the future isnt going to be easy, not to mention adjustments for the Euro etc

Guest	Oct 26, 08, 05:10 / #
"the best country in the love to live in" lol A freudian moment perhaps......the best country in the world to live in. Excuse any other typos also, its a bank holliday weekend here and I am tired :)

LwowskaKrakowThreads: 49 Posts: 504 Joined: Mar 9, 07 MEMBER	Oct 26, 08, 05:15 / #
eleanoroconner: the sites were swarming with Polish buyers I hope that you are right , we will see in a few months if everything is ok. of course wealthy Poles from Upper Middle Class with tons of liquidity need to invest their money somewhere and Real Estate seems the best investment but the prices in Krakow city center are quite unreasonnable for the average Pole or even the average European. It is ridiculous and does not match people 's salaries at all whether you can get a loan or not.The difference is too WIDE !

Wroclaw Boy	Oct 26, 08, 05:20 / #
What worries me mostly about the property prices in Poland is the fact that most Poles have been totally blasted out of the market in terms of affordability. A similar trend occured back in 2003 before Poland's EU accession, prices rose sharply expecting a gold rush and it just didnt happen so back down they came. Is the current situation remotely linked to that? The investors have virtually dried up so lets see what happens now..... Elaine you as a serious investor in Poland and a 100% Mamdom preacher (old Tim never has a bad word agaisnt the Polish property market) I hope you are right. But unfortunately I dont share your enthusiasm.

isaThreads: 13 Posts: 43 Joined: Oct 22, 08	Oct 26, 08, 06:37 / #
Wroclaw Boy: who wants to live in Florida anyway. Hmmm...Stephen Spielberg comes to mind. And every other highly successful individual, no matter what field of work. They have their choice of locations to reside in, and somehow I doubt that Krakow is on their short list ;-) BTW - I spent yesterday on the beach...where were you?

ash1972Threads: 3 Posts: 93 Joined: Oct 22, 08	Oct 26, 08, 06:46 / #
A few points before we get way off track: 1) Comparing Florida property to Polish city centre developments is clearly silly. A relevant comparison would be to Bulgarian ski resort or coastal property as the same factors apply: unlimited land for development, aggressive marketing to foreigners and no real local demand. The big cities in Poland are experiencing population growth due to inward migration. Why inward migration? Because the cities are where the highly paid jobs are. 2) The fact that the average Pole can't afford a central Krakow development is neither here nor there. The average wage earning Brit hasn't a hope in hell of being able to buy a central London apartment. Downturn or not, prices in Manhattan aren't going to adjust to become affordable to the average Kentuckian. 3) True, property markets do move in roughly 10 year cycles, as we're seeing now in Ireland and the UK. Irish prices in particular went up a staggering 5 times in the 12 years up to 2007. But - 2008 is nowhere near the 10th year of the Polish growth cycle. In fact prices fell in 2004, and 2005 was the first post accession growth year. So the 10 year cycle principle doesn't really apply here. 4) Price increases are coming from healthy GDP growth (4-5 per cent) and not solely easing credit like the last 3 years of the UK's boom. Even the weakest of the new EU member states, Hungary, is nowhere near recession. 5) The market for off plan Polish property is, and always has been, 90% Polish. Compare that to coastal Bulgarian property where the market was basically 100% foreign.