Polish Property and Real Estate Prices - Quarter 4, 2007

2007 was a turbulent year for Polish property. Vendors in Krakow became over ambitious in their asking proces which lead to large scale decreases in value during the autumn. Warsaw saw the price per square metre of apartments rise 32% before falling back 5% in Quarter three. Gdansk experienced average offer prices rising 15% in the spring but only 4% in the summer. These are to name but a few odd events.

The overall picture was confusing for investors but not unusual for an emerging market finding its’ feet. Whether or not such dramatic changes are over remains to be seen in 2008 but Quarter 4, for the first time in over a year, saw steady per square metre price rises in all major cities and at similar levels of between 5 and 6.5%.

As a summary for 2007 price per square metre increases for residential properties over the twelve month period were as follows:
Poland: 51.6%
Poznan: 68.5%
Lublin: 48.2%
Gdansk: 35.5%
Warsaw: 35.4%
Krakow: 10.2%

Warsaw, as mentioned in the Autumn report, is the only city expected to see price decreases in 2008 and this is primarily because of the large number of new developments which are due for completion during the year. The result will be a temporary overload of supply that will probably take several months to soak into the system before prices begin rising again. Or put into other words a temporary chance for some canny buying by switched on investors.

For the country as a whole the atmosphere is much improved following a change in government to the more
progressive and Europe friendly PO party as well as a greater awareness by the general public on the changes taking place in the infrastructure. Much of the latter has been caused by a focus on the need to prepare for the Euro 2012 football championships and a greater effort by local authorities to publicise planned, current and finished projects. With this in mind over 600 kilometres of new motorway is expected this year (the equivalent of building from London to Glasgow in Great Britain) as well as further progress on several new airports including Lublin. These large investments are all expected to have a positive impact on the economy and property prices.

Internationally Polish homes have become proportionately more expensive due to the increasing strength of the Polish zloty. A 500,000 zloty property in the summer of 2007 would have cost a UK buyer 90,000 pounds sterling. In January 2008, simply due to shifting exchange rates that price has increased to 104,000 pounds sterling which is obviously good news for those who have already bought but probably effected the purchasing decisions of some potential buyers. Despite the value of the zloty, the rising property prices do indicate strongly how little the Polish residential real estate market is reliant on foreign investors with increasing wealth inside the country providing most of the drive
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On a final note one clear trend is visible and that is the Market Mix. In Quarter 3 of 2006 houses made up 42% of the available stock on the residential market. As of Quarter 4 2007 this figure had dropped to 24%. In Poznan and Warsaw it is just 10%, The effect is clear in the pattern of rising prices. While apartments as an average across Poland rose 31% over the same period houses were up 56% and there is no sign that this trend will reverse or change as major builders continue to focus on residential blocks rather than detached homes. For those pursuing capital gain or those considering what to develop in the country it may well be time to consider houses, rather than apartments.