Polish property bubble
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Over the span of years 2002-2008 real estate prices in Poland have increased drastically. Between June 2006 and June 2007 alone the average price of a square metre in Warsaw rose from 6,683 PLN (1,636 EUR) to 9,540 PLN (2,519 EUR) (over 50% rise in euro terms).[1]
According to a major Polish newspaper, Gazeta Wyborcza, the average monthly salary in Warsaw buys 0.26 m2, or in Kraków 0.22 m2.[2]
Same sources give rental profitability at 4% yearly. This is lower than interest rates on bank deposits (5% in Polbank etc.).[2]
In early 2007 the Polish property market began to show early signs of a property bubble; these included:
- banks increasing loan periods from 30 to 50 years to extend credit limits;
- over 1 million families already in debt, and roughly 300,000 more going in debt every year;
- increasing interest rates - analysts predict 6% by the end of 2007 (from less than 4% in 2006);
- number of new apartments for sale in Warsaw at one of the oldest Polish real estate portals: tabelaofert.pl increased from around 1,750 in November 2006 to over 4,300 in June 2007 to over 11,000 in July 2008;[citation needed]
- exotic companies declaring real estate development plans;
- Polish economy showing signs of the overheating: from 2005 to 2007 the forex deficit almost tripled (it had been decreasing in previous years); imports, which were decreasing (by 5%) in 2005, jumped to a 25% increase in 2007;[citation needed]
- stagnation of prices and dramatic drop of sales in a long period of time with dynamically increasing supply of residential properties.
The arguments for further real estate prices rise or stabilization are:
- fast increase of salaries - around 8% per year;
- low figures of both housing estate area and apartments per person, compared to other developed countries worldwide;
- money repatriated by Poles who have emigrated;
- rapid urbanization - the population of rural areas and small towns is declining rapidly, while the population of major urban areas is increasing quickly;
- Warsaw has a population of only 2 million people – approximately 5% of the whole of the country – very low for a capital city.
[3]In 2010 Internet surveys showed that Poland[4] is one of countries with rather high house price to income ratio (13.58 - it decreased from 23.90 in 2009) and estimated rental profitability at 3.92%-4.31%
[edit] See also
[edit] References
- ^ (Polish) Prices of flats in Warsaw at Oferty.net
- ^ a b (Polish) Katowiczanie najszybciej zarabiają na mieszkanie. Raport - czerwiec 2007 at GazetaDom.pl, derived on 5 November 2007
- ^ Property Investment Index By Country
- ^ Recent history of Polish housing
