15 reasons why the Polish real estate market will crash soon

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.

poland-claritaslux/blog/polish-real-estate-market/

Very good points made here. I'm not into voodoo myself but many Poles seem to be. Witchcraft and black magic books adorn my shelves as they belong to my wife. Maybe they are avid D&D players and have summoning spells where they turn leaves into 100PLN banknotes :) ;)

Joking aside, I foresee a slump too. As the Beastie Boys once said, 'something's gotta give'. Salaries here are frighteningly low compared with prices and various costs. Putting money down is going to be a major problem as many are heavily reliant on credit as it is. Disposable income cannot be flashed around too easily by most people.

However, you could say that it's the price you pay for snobbery! 7000PLN a square metre is absurd! I have inspected many properties here this year and I don't like what I am getting for my money. Now that I am married, special arrangements exist which may make it viable.

Seanus, it is good to see a mature opinion and realistical opinion, not blinded by greed.

Maybe this post will become in time a sticky

I look around and I see many unenterprising looking people. How on earth does such a dour buffoon make money? (I often ask myself this) Maybe there's a private source of collective funds that are eluding us? ;)

Greed should never get in the way of practicality. I just dislike the fact that I am at the behest of others making rules that aren't commensurate with our salary as a married couple. My 4 main monthly expenses come to over 2000PLN a month and I'll be damned if I have to run twice as fast to stay in the same place.

I feel it acutely when I check out properties here. The recurring thought, how on earth can I finance this and do I have the will to do so? Ah well, distractions are available ;) ;)

Claritaslux

"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".

I totally agree with you that a lot of apartments were built for foriegn investors and were/are overpriced and out of reach for nearly all Polish people, but, lets get a few facts straight:-

The funds Poland have/will receive from the EU are for "infastructure" projects, not housing, this is financed by private investors and to some small degree, the goverment.

As for a huge surplus of finished apartments, I suggest you read the link below so that you know what you are talking about. It will explain the number of units built in 2008/2009 and the number that are available to buy at the present time. It will also indicate to you that proposed developments will not occur in the present financial climate which will lead to a shortage of new properties in the future.

Shrinking population or not, older housing stock in not being replaced quickly enough to ensure decent housing for the next generation.

wgn.pl/i/a,12,537,0,en,item.html

1.The fact that a block of flats is new doesnt mean AT ALL that it is of higher quality.
Many builders are cutting down the costs to the very minimum, so they can assure profits margins for them even higher than 150-200% at times.

The only thing that is SURE is that the utilities plus the
maintenance will cost you 2.5-4 times more.

2.The poland population is decreasing, over 3 millions poles are living and working abroad
and not likely to come back to the misery wages from Poland.

These 3 millions poles' apartments will be soon on the market - proving how high is
the total OVERSUPPLY

I'm not sure if I missed something, but where are the 15 reasons?

Who the hell is this guy posting under around three different names within two days and all linked to property prices crashing in Poland?

Dude - just register and stick to one screen name, and then we'll have a proper debate.

We keep answering his comments with reasonable replys and he just posts the same stuff but under a different screen name and in a new thread.

At the end of the day the cost of any development is based on land values. This is the same rule for everyone. Usually 30% land, 30% building costs, 30% profit, 10% costs. I've built in many countries and these figures can vary but at the end of the day what you pay for a sq. meter of land will finally decide the end value that is given to general public. In good times prifits can be 40% and above. In the UK they work on 18-20% In spain it's 40% in Brazil no one would do a development for less than 50% profit.

Supply and demand. As prices fall and the housing market fails, used properties flood the market, this reduces everyones value on their property. Building materials are dropping, labour is abundant and cheap, in the end the bottom falls outor the bubble bursts. The only area for speculation is the land. Once funding dries up as is happening, sales are falling and the second hand market is increasing the only way the market will go is down..down and down. If you have funds to buy the next few years in Poland will be very rewarding for investment into the real estate market.

Many companies are now building up land banks now which will only produce huge profits later, unfortunately Fred Bloggs will not see the advantage of this, neither now or in the next 10 years when the properties will be built.

Yes, although he raises an interesting point, he looses credibility by posting under different names.

For that reason, I don't believe in his comparisons of property prices in different countries.

He links property prices to the average pay only, while the price is basically the function of a balance between demand and supply which fact he completely ignores. I think he suffers from the condition called "property_price/avarage_pay fixation", condition which cannot be easily cured with the help of other PF posters.

huh.. what are you talking about.. at most this current crisis has taken back 20%.. of course this excludes dumps like Detroit or Buffalo..

and where are these 15 reasons?


lol.. that's just funny 'cause that's one of the silliest things i have read here in a while.

Yawn...

I see when the arguments are clear, the only thing left to do is to attack the messenger - that is me.

Attack the arguments, which you know very well they are completely true.

But many of you are apartment owners, and you are greedy, and you know it.

Some landowners here are despicable. HOW did Poland live under communism?? That's repression in the extreme for those that have abundant material drive.

There was a landlord here who tried to skin my friend of 8000PLN. My friend told him where to go.

Dude... you have no idea what you are talking about... or you are just trolling around...

Grzegorz, you just do personal attacks out of frustration.

I brought clear arguments, point by point.

Here is more:

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 in Cracow wait and you will see prices go to normal levels, about 2000 pln per meter.

Clarita - Why dont you stop spamming your website

They will never go for any where near that price as they cant even be built for that. If you buy (outscirts Krakow Land) on your own and complete all the labour your self you may be able to achieve around 3500 PLN / m2.

Thats a hard fact im afriad. Developers in times such as these simply stop building and wait for the market to recover. They will not complete and sell at a loss.

I am giving information.

I have friends developers. The cost of a built sq.m. is around 1000 pln/sq.m. for a LUXURY building, 600 pln/sq.m. for a regular new building.

Of course they write a lot of BS in magazines, because they don't want you to know their secrets and their profit margins.

So if they are selling for 2000 pln/sq.m. they still get A LOT OF profit

Anything, which ever cost that much is less than 0,1% of the market... I could crush your "arguments" but what for ? You will be spamming these forums with the same nonsense for some more time anyway, then you will get tired and go away. Come here in a year and we will discuss this (soon coming of course...) gigantic market crash... OK ?

Youre forgetting about cost of land and fit outs, cost for a half decent fit out is 400 PLN / m2, add that with the land and youre already at around 800 PLN. Then include your mate Bob the builder and we got 1400 or 1800 PLN.

Labour only is 500 PLN / m2 at the moment im afraid then add materials, i dont know where you got 600 PLN / m2 from.

When you add the land, you have to divide it by the number of floors.

If the price of land is 2000 pln per sq.m. of land, if the building has 10 floors,
the added cost of land is 2000 divided by 10 = 200 pln/sq.m. of apartment

This is so basic and still so overlooked.

The cost of labour is NOT 500 pln/sq.m.

The average salary of a worker is 1500 pln/MONTH.

In few months, 10 workers will finish a building. So the actual cost of labour is around 100 pln/sq.m.

Wake up people, the price of real estate in Poland is overpriced BIG BIG TIME

Basically the arguments are correct. Supply and demand is more powerful than what people "think prices should be". The real estate in Poland is not based on supply and demand right now. It is a bubble. Look at every real estate market in history or just look at the USA and see what happens in a bubble.

Every cynic that says no way prices will fly up forever, gets burned in the bust.
I do not care if its is the stock market or the real estate market, there are booms and bust based on over speculation. So the arguments are correct, real estate is in for a fall.

Ahhhh, Mr. has played you all for fools. mbiernat, Clarituslux, polsky, michaelas, Tadeusz2007, popw, etc, etc, etc. They are all the work of the same person. His name is Mark and he has been lurking around on PolishForums for some time.

Mostly posting inflammatory comments full of misinformation and nonsense. Why? Just to get you pi$$ed off enough to actually go to his website(s) and start clicking around. Why? Because this is how he pays the rent:

websiteoutlook dot com/www dot claritaslux dotcom

His thing is SEO, Search Engine Optimization, and he knows that the admins at PolishForums are pretty darn good at this. So he constantly posts on PF with nonsensical topics full of "hot" words and phrases. Take a look at his first post in this thread "bubbles", "real estate", "eastern Europe", "collapse". Throw some of those words into Google and you will quickly end back up at PF, you click on his websites, and cha-ching for Mr. Biernat.

I don't know why the PF Admins put up with him; he has been doing this for some time and has been very disruptive to a number of threads. He is having the last laugh now, as I'm sure everyone will click on his web-site just to have a look at his creepy mug. CHA-CHING. You can also take some time to read up on his "personal experience with brain regeneration"

Hats off to him, he is pretty good at this. Just Google "Krakow Post". The number two return is for "Krakow Post - Most Popular Articles". Some joker named Polsky has some interesting thoughts on the property market in Krakow...

The website listed on his profile page includes your current PF screen name. I didnt feel the need to visit it at all.

So in fact you are Mr Biernat, like i said a few days ago this is actually all you but under different screen names, and now the plot reveals itself. In any case ive enjoyed our little debate.

His best line was yesterday on another thread. After he had screwed-up one of his posts: "I am new on this forum and do not know exactly how to use it."

New as in new under the username Claritaslux? Or new as in I've only posted a few hundred times on PF under different names, so give me some time to get the hang of things?

Well seeing as youre trying so hard for attention i had a look at your site, languages hey downloaded no less. I like it and all the best with that.

I am not Mr. Biernat. This is absurd... anyone can claim that all users who are saying prices will go up even more in this huge real estate bubble, are just the same user.

Here posted many longtime users, and said about the ridiculous proportions of the real estate BUBBLE in Poland.

Mr. Biernat, and many many others. Just read the other threads.

You can aslo see the LACK of arguments of people who say it is not a real estate bubble.

They say just based on demand and supply, the price of the market is correct.

ROTFL, but we are talking about the EVOLUTION and the CRASH that will happen in the next months-1.5 years and the prices collapsing further more.

And supply is higher and higher, while demand is lower and lower,
because:

- Poland has negative demographic growth
- polish people are going working abroad, selling their homes... and who is buying
when banks give no credits? ;)

I wonder where are the mods in this and other threads. They are only too willing to erase an innocent sentence in Swedish, French (or for that matter Polish in a wrong place), but they remain silent when it comes to someone who seems to be a little insane, posts everywhere on the forum and has nothing more to contribute than to communicate his obsession of a possible real estate market crash in Poland.

You are confusing what people post with how they post.

And I don't think the OP is correct but these things go in cycles so the longer he says it the greater the chance he has of being correct.

Markets fluctuate, people who forecast doom will have their happy day too.