I am an American living in Kraków, Poland. I am also a Polish citizen and an investor. My view of the Polish real estate market is this, if you want to buy a house to live in for the next ten years, that means owner-occupied, I think this is fine. But if you are speculating on investing in Polish real estate you will almost certainly lose money. All these photos are within a five-minute walk of my flat and this is not even all the empty buildings, there are, just a small sample. There are 1000s and 1000s of apartments waiting for an investor or someone to take them off the builders and agents hands, in a short radius of my residence.
Every day, I see a new investment being complete and my wife jokes good, I think they should build more, and sure enough, they do. This is nothing more than a speculative bubble that is in disequilibrium for the long-run. I know many people in Poland in Real Estate from builders to agents to a lawyer to investors and they all think the market is overbuilt and unrealistic.
Warning against investing in the Polish real estate market
- Oversupply – There is a huge over-supply in the housing market. Foreign investors build on speculation and local people can not afford their asking price. I see scores of empty investments, new and old apartments empty, and they are empty for many years.
- Weak Demand – Every person I know is building their own house in the suburbs. No one person I know is moving into new construction. The price per meter in a city is about 3-4,000 dollars a meter. In the suburb, you can build your own house for about 500 dollars a meter. My sister-in-law finished a beautiful large house in the country for 300 dollars a meter. So what person will pay 1000% more for a house that is not built to their design. Usually, some ugly block of flats that is some investors dream of making a profit with no care about design or the people who will live there.
- Mortgages are hard to get – For normal people it is not possible to get credit since the crisis.
- The population is decreasing or flat – Even a popular city like Kraków where I live, has a decrease in population every year, partially because of the birth rate but also emigration to warmer or high paid countries now that Poland is in the EU.
If you just consider supply and demand and not even the tight credit market or long term demographics, the market is too high.
My friends in the Real Estate business have said they are selling nothing.
I have heard people putting money down on new construction and the builder goes bankrupt. I think the housing market in Poland is a mess.
The good news about Polish real estate
Poles are hardworking sensible people. The country is getting rich. With time income levels will rise. However, if the average income is 1000 dollars a month, this should be the average price of a house per meter.
Right now it is 300% this. Prices only really increased from 2005-2007. To me, that is a speculative bubble. Before that is was about 500 dollars a meter instead of 3-4,000 dollars a meter. Some someday in the far future incomes will rise and prices will come down and there will be equilibrium in the market.
Until that time, I would not walk but I would run from investing the Polish real estate market if you are considering buying. Me personally I will build my own house. It is cheaper and to my design. It will be my primary residence, not some speculative real estate investment in Poland.
Let me know when you think this market will recover, but some people say ten years.
I am someone that lives in Poland and know about the real estate market first hand. It is not a good investment.