Poland property: still sagging

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It’s not enough that Polish real estate owners (many of whom have mortgages denominated in Swiss currency) have been battered by the soaring franc, they’ve also had to contend with a steady fall in the value of flats.

According to a new study by Ober-Haus, a central European real estate agency, that uses its internal data, apartment prices are continuing to sag. In September, prices fell month-on-month in most large urban centres – from a tiny 0.1 per cent in Warsaw to a steeper 1.2 per cent in the secondary cities of Poznan, Lodz and Katowice.

Since the peak of the boom, just before the onset of the global economic crisis in late 2008, apartment prices have fallen by about 10 per cent in Warsaw to 28 per cent in Lodz, an industrial city in central Poland that was a late-comer to the real estate frenzy that gripped Poland following the country’s entry into the EU in 2004.

Poland’s central bank has bad news for those homeowners hoping for a quick turnaround. In a report issued earlier this month, the central bank finds that price falls are slowing, but there is little sign of a rebound.

“During the analysed period there was a continuation of most of the trends seen in the 1st quarter, which can be described as a shift in the market to a new point of equilibrium, with lower housing prices and lower production costs,” says the bank’s report.

Those lacklustre prices are scaring off potential buyers. REAS, a real estate consultancy, reports that housing transactions in Poland’s six largest cities fell by 10 per cent in the third quarter to 6,807 sales.

The last optimists must be the developers, who are continuing to build despite the sagging sales. In the third quarter they handed over 8,862 new flats – a 23 per cent increase over the same period a year earlier.

That means there are 48,000 unsold flats on the Polish market – a record – and construction permits are up by about 10 per cent. That backlog will take a long time to shift, especially with the banking regulator showing signs of tightening loan requirements for new borrowers, making it more difficult to get mortgages.

All that is enough to make any real estate punter pretty gloomy.