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Polish Residential Property Prices, Quarter 3 2007 |
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The latest residential property price reports from Mamdom for Quarter
Three of 2007 have now been released and show a very mixed picture with
sharp movements both up and down depending on location. Operations
Director Tim Hill looks at some of the causes behind the latest figures.
Any property market and its' values are about confidence and this
quarter the Polish, to some extent, put confidence on hold. Two factors
came into play, a national election and vendors getting too greedy. The
effects were felt mainly in the prices of apartments as houses continue
to be in increasingly short supply.
The national election was felt strongly with the highest turnout since
1989. Poles, fearing the continuation of a government that had done
little to help business and make long term economic reforms, voted in
their millions. But nothing was certain from the opinion poles that
jumped inconsistently from one major party to another so major
financial decisions such as home-buying were delayed by many
individuals.
At the same time vendors and investors who had revelled in the price
growth of 2006 overstepped the mark. In Krakow especially the asking
prices of houses rose nearly 40% in Quarter 2 but, being unachievable,
they fell back 25% in the Autumn. Cities that had not fared so well in
2006 showed far more realism and thus a much more stable picture.
Gdansk apartments, for example, rose 7% (price per square metre) while
Lublin apartments dropped nearly the same amount on this measure.
On a national scale however apartments remained steady with prices per
square metre up 2% this quarter and 30% for the year as a whole. For
this property type it is evident that where you buy is critical if
capital gain is the objective.
For houses the situation is very different. House builders have
traditionally been smaller firms with the large scale developers
concentrating on apartment blocks. The former have experienced, to a
greater extent, the shortages of labour and materials this year and
have not been able to meet demand.
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And for houses demand is ever growing. The Poles are getting richer and
given the choice between an apartment or a house they will opt for the
latter. But houses, as a percentage of available residential stock, are
still decreasing. 43% in quarter 4 of 2006, 28% in Quarter 3 of 2007.
The shortage is reflected with the national price per square metre of
houses rising 13% in the last three months. Houses, at the moment, are
the properties delivering capital gain and they may remain so until
main stream developers start to consider this market more carefully.
In summary the emerging market that is Poland has learnt a great deal
this year. Politics can influence prices and greed by vendors is not
met enthusiastically by buyers. With this under its belt and a steady
political landscape now in place a much more stable future is expected.
And capital gain will remain stronger than in most of Western Europe
simply due to the large scale investments in the country\'s
infrastructure. However from an investors point of view buyers now need
to take more care in where they look and what they look at.
Essential to this new 'clever buying' is to consider cities and areas
less in the limelight or look at alternative property types.
Residential off plan apartments are certainly what the crowd go for but
smarter buyers are already looking at houses, apartments on the
secondary market, office space and even warehousing. If you are serious
about capital gain do not be blinkered and do not believe it can come
easily. A little homework will pay off.
For reference when looking at pricing it should be noted that changes
in the mix between houses and apartments on the market is dragging
average prices down disproportionately and at present it is advisable
to use the price per square metre measure.
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