Poland's apartment prices continue to fall

So if we use stats then we are akin to greek bureaucrats if we don't use them we are asked for a source. Sounds like you are the one that is difficult to educate.

As for the argument about what would you have after 25 years its not as simple

- you would save repair costs and time and hassle
- you would have much more flexibility during that 25 year period if you wanted to move
- some of the proerty sold at the moment is so shoddy I would be amazed if it's here in 25 years and will certainly look very distressed.

- you could have invested your surplus cash in something else in the meantime.

Plenty of countries have that occupancy model including germany and holland and they are not noticeably poorer.

Re the Warsaw prices, if you bother to read the full article you would see that each Market is referred to in terms of fall from peak, I have no idea what the currency movement was from Warsaw peak but it could obviously be different from that in Poznan.

But in zloty terms some markets are already showing 30 percent falls from peak - e.g. Lodz

Depends how you use them. Use them as some people have done in this thread and you are very much akin to greek bureaucrats.


- Yes, because it is always so much less time and trouble to get a landlord to fix something, isn't it?
- But you would have far less flexibility if you wanted to make your flat fit your needs (knocking a wall out, resizing the bathroom, getting the kitchen as you want it, having the security level you want, etc etc).

- That's a problem avoided by simply not buying a low quality property. Simple.
- How much surplus cash would one had had (not much, given that rents at not that different from mortgage payments) and would one have been able to invest that spare cash to have anything even close to the value of the apartment one lives in (highly unlikely).


Are they really? The price of a property in Lodz has fallen by 30% since the peak? Or is it that the market is down a bit and moving towards lower cost properties?

Not really, you can simply look for a place that won't require any further work :)

The problem with mortgages (or long term investments) is that it's really hard to predict how the market / investments will look like in 20 or 30 year time.

However Polish property prices make the long term rental look like a reasonable option at present.

Let's say I would like to live in a decent size, decent location apartment in Kraków. The 30-year mortgage for 70-80sqm apartment will cost me at least 3-3,500 zł monthly. Rent for a similar place is 2,500zł (quite often even less than that; I can get a split-level 150sqm place for 2,600: dom.gratka.pl/tresc/401-26934153-malopolskie-krakow-srodmiescie-ks-bp-wladyslawa-bandurskiego.html#02394ac29fb7b10d,1).

Assuming the living standards are constant - I can either pay 3.5k monthly for "my own" of 2.5 for rented. A thousand in my pocket monthly. By 30 years.... That's already nice figure. Now lets say I'm using this balance for investments - the figure gets even nicer. And I am not spending a single grosz on repairs, "czynsz", home insurance etc.

But. As per my first sentence - I am not able to predict how the property market and my investments will look like in 30 years time. It may be that for the money I saved I won't be able to buy a shed in 3rd world country. It may be that the rents in 10 years time will be twice as high as the mortgage payments. It may be that the cash at hand and general liquidity will prove to be priceless at a couple of occasions. I am not going to claim that rental is more reasonable than buying. It's gambling, really. But the chance of winning on rental option not much lower than on the buyer one.

The opposite is a more likely outcome,even within 2-5 years;you never know.
Prices going up are bordering on the impossible.

In 1987 I sold a small terrace house in the UK (paid 6,000 GBP for it) for 36,000 GBP, put this down as a deposit on a detached cottage on the outskirts of the city, which cost 62,000 GBP. As it was a fairly large plot, over the next few years I built and extended the cottage to almost double the size, cost was around 15,000 with a grant of 6,000 from the local council. At the height of the property boom (2004-2005) the value was in excess of 500,000. The mortgage amounts have been approximately one third of what the rental on a local apartment would cost and in July of this year the mortgage will be paid off and even if you allowed for a 40% fall in prices, it will still leave a pension pot of 300,000 if it were sold.

Its not going to be sold any time soon, its still loved and cared for. You would have a hard job convincing me that renting was/is a better option. I know Poland is a different proposition as I have also bought a home here but even allowing for the correction in prices, I am still well ahead from when I bought in 2005, again, this house is not for sale, I will leave it for the kids to enjoy. Stocks and shares are fine if you are a gambler, even depositing your money in a bank seems a risk nowadays (although, not much of a risk for the bank), I prefer something I can see, feel and use and property fits the bill.

But wasn't it because of almost 60% of the property value you paid in the beginning?


I have no intention of doing so, your choices worked well for you, enjoy it :)
However for me the rental option worked quite good for the last 15 years or so, so I will keep on doing what I'm doing :)

exactly.

That is the whole point you seem to miss, it was a "paper" monetary gain, exactly the same as it is now, unless, I sell the property. Something is only worth what you pay for it, until you sell it for a profit. Milky is only agreeing with you because he is a frustrated fckin idot who has landed up in Poland with no money to buy a property, that is why he likes the idea from Wildrover of properties being sold for 50 zloty. All you are doing is encouraging him.

No matter what valuation you put on a property, it would always be overvalued and a rip off, that is his mentality.

You certainly fit into that category. Avalon doesn't even seem to understand the basic maths.


Thats hindsight and a collection of lucky situations. Buying in the UK now would never return any sort of similar return - its impossible as prices are to high.

exactly what? so paying rent for 15 years and having nothing to show for it is better than having a mortgage?

Sorry , I mixed up lodz and Wroclaw. Lodz showing a 19 percent fall from peak, Wroclaw a 32 percent fall from peak. The source is REAS, one of the more respected consultancies on the Market.

The basis is price per sqm of developers standard without garage on new properties. I.e it is apples for apples. However they also say that there is almost two years worth of housing stock on the Market, meaning that some of the properties are the same ones showing falling prices.

I take it from you utter inability to address the topic and to instead make personal comments that you're still slightly upset about me pointing out that the figures you present show there has been a far lower fall in real terms than you claim.


Not really, it could well be that developers are moving away from the 'excusiv luxary' city centre properties and into the cheaper stuff on the outskirts. That is certainly what we're seeing here in Warsaw.


Depends on whether one can actually get a mortgage or not. Care to guess who cannot?

Yes, starting a construction company employing 70 men and running it for 25 years was pure luck, coming to Poland, retiring and starting another construction company is also pure luck.

So when somebody fails in life, its bad luck, nothing to do with them being useless.

What has that rant got to do with the rise in value of your house in the UK?

Anyway, it does hint that you don't think the UK can continue that run of property value increases - you moved to Poland. A good move.


Using ladykangaroo's figures, putting the 1000 pln monthly saving on the rent into bank account for 15 years and getting 7% interest will give you 313k pln at the end of it. Over a 30 year mortgage you would have 1.175million zloty in cash in the bank.

In my case paying rent for 15 years was always cheaper than paying the mortgage. I could do whatever I wanted with the balance and I'm quite happy with my choices. Do you know for example what was the profit rate for gold investments over the last 10 years? I know. I was able to move where I wanted and when I wanted having the money to do that. I can leave work and go back to college now in my 30s because there is enough money for me to do this and I am not scared of some colossal monthly mortgage rate that's not going to pay itself (for the next 20 years or so). I can invest in my own skills, interest, passions, pension funds and constantly look for better opportunities as I do not drag the mortgage anchor everywhere I go.

Sure, I might have applied for mortgage 15 years ago. From where I am now in my life I would probably paid this off in a year. But there is a good chance I wouldn't be where I am now, I wouldn't have made certain choices 15, 10 or 5 years ago.

And "nothing to show for"? Is the property really the only thing you can show for?

At the moment I could afford the property. If not in cash - by getting a few years mortgage, renting the place and letting it pay for itself. But I am happy as I am now - and for example my landlord isn't: after deducting tax, maintenance charges and whatnots the rent he is getting covers half of his mortgage rate at best. Of course the roles may switch in 10 years time: he will be happy with his precious property and my choices prove to be not that great... Or we may be equally happy and relatively well off. I will keep my fingers crossed for that.

Assuming 80 sqm, giving a property value of 640,000zl, and an average increase in price of 3% per year (which is highly likely to be a fall in real terms, given that inflation is likely to be at or above that rate) over the 30 years, at the end of the 30 years one would have a property worth 1.553 million zloty.

...but in the meantime would spend anything from 640,000 (buying with cash) to 1,200,000 (30-year mortgage with no deposit).
Gosh, if I was to buy I would hope for the average price increase to be higher than 3%.

The point is that Peter used the surplus cash you say you'd have from renting as opposed to buying with a 100% mortgage (i.e. 1000zl per month) to calculate that after 30 years one would have 1.175 million zloty. But if one buys, one spend the same amount every month and ends up with a property worth (using a conservative growth rate) of 1.553 million zloty.


Same here. The point was to use an unrealistically low figure to show how useful Peter's calculation really is.

Agree, as long as "ends up" is replaced by "may end up" :)

The thing is that in 30 years time everything may happen. Properties prices may be sky high or may fall so badly that it will take years to recover (I'm living in Ireland, remember?). The property may require little or no spending - but substantial refurbishment may be required on some stage. My little investments, as diversified as I would like to keep them, may be worth nothing in 2030, but they can also be well above the conservative 7% interest rate.

My point is: there is much more to the choice between renting and buying than:


Especially if you are an average Polish family who have to deal with the unreasonable prices on Polish market (way too high when compared to the average salary).

Even if the 640,000 property suffers a 20% fall in the first year and then an average growth of 3% per year, the end result of that calculation is still 1.206 million.


A problem avoided by buying something solid.


My flat has certainly done more than slightly more than 3% per annum.


My favourite bit of the equation is not having to deal with a Polish landlord (who have a habit of being the scum of the earth).

The rant as you call it was aimed at Milky. Just trying to point out that sitting on your a** and moaning about the price of property is not a solution. I did not train for construction, I opted to enter this industry in my 20's as it offered more rewards than the job I had. If he has moved to Poland and cannot find work then he will always have a problem. My Polish is virtually non existent, yet this has not stopped me starting a business here.

...and if in the last? :>
And if the fall is more than 20%?
There are plenty of "ifs" :)


A problem avoided by renting something nice and selecting the landlord carefully :P


Of course it isn't. But the problem in Poland is that:
a) (and it's a big "A"): moaning is a national tradition
b) getting a mortgage is a real bureaucratic hurdle race and thousands of people employed to various extent in market gray zones may not qualify for the loan even if in reality they earn enough

c) the high property prices mean that people end up with the worst sort of loan available in the banking system: extremely long term mortgage loan.

Still ahead on the deal: look at the numbers.


Easier said than done. Of all the landlords I met in Poland, only one was not pondlife. Frankly it is hard enough getting a decent flat for decent money in Warsaw without also requiring a decent landlord.

..and if my own return rate is higher? And if I don't spend any money on czynsz, furniture, property taxes, plumbers and insurance? And if on some stage property prices hit rock bottom and I will have spare cash in hand and buy neighbouring property for 300,000 from my savings?

Really. To many "ifs" to be sure that one option is always better than other.


...my experience was just the opposite, but I don't think it matters?

This all makes total sense to me, don't mind the developers and the guys in negative equity on here, they're like barbers who hate men with long hair.. I would like to purchase another property in the near future for cash, but atm renting is a no brainer and risk free. Got friends back in Ireland on anti depressants because of buying over their heads;so why expect people/Poles to pay 10 -15 times there wage for a place when they can rent for much less and sit back and watch prices sinking.

I agree with you on point a.
point a and b are not so accurate. Anywhere in the world it is the same thing. The fact is- money is for sale and people can get it if they qualify. In my opinion the main problem is that people are trying to buy something out of their price range- and there is no possible way to afford it. The property ladder works. Start small then work your way towards something bigger. Unfortunately many think that they deserved big and they want it now.

With regards to the banking system. Like I said, money is for sale and it is up to the borrower to do their homework on which bank offers the best deal. That is just the way it is.

But she hasn't put it in to the bank, she has probably paid someone else's mortgage and it's not certain that the bank will still exist in 30 years like Lehman Brothers.

I think it's great that people rent.


And if you had bought in Poland 15 years ago, you'd have none of those problems.


There are plenty of properties for this price today.

I don't have any poblems, that's my point. I may have some in the future but I will do my best trying to avoid this.


...there is a good chance I would still be in Poland, safe and bored, too afraid to quit my job for example :)


--->

Very true!! Everytime my wife and I visit the UK, she's horrified at the living standards for the prices. I feel sorry for most of my friends/colleagues as, due to the ridiculous prices asked for old, damp, low standard properties, the only option is renting. Surely the UK housing market madness must end at sometime?? Some people spread propaganda about the Polish market being due a correction, yet I find it more than reasonable to break into (even taking into account the dramatic rise in 2007). The UK, on the other hand, is impenetrable by most normal people. I can only laugh when I see 'sheds' in small towns priced at GBP100,000. The same properties I remember being sold for GBP15,000 in the 80's. I know someone who has just purchased a 50 - 60M2 new flat in Krakow for the same price. No brainer for me, I would take the city flat all day long (given the 2 options).

Krakman would you make that choice if you were on a local wage ? 600 quid per month in your pocket in krakow ? Just the capital portion alone would absorb almost 15 year of your entire income.

What relevance does Britain in 1990 have to poland in 2012 ? I also made good money on a place in the 90s but it was a totally different set of circumstances with a couple of important government kick starts like flogging off council houses and big improvement grants. I would also say the behaviour of the british consumers in withdrawing paper money equity to pay for plasma screens and trips to Florida is a disastrous legacy of that book.