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Last Updated: Oct 18, 2014




The Polish housing market is regaining momentum. A declining supply of new homes, interest rates at record lows, and new government programs aimed at stimulating demand, are all causing Polish house price falls to decelerate.

The average price of apartments in Warsaw, decreased by 0.9% year-on-year (y-o-y) to end-May 2014, to PLN 7,785 (€1,880) per square metre (sq. m.), according to Ober Haus, lower than the declines in April 2014 (-1.3%) and in May 2013 (-3.5%). When adjusted for inflation, property prices in Warsaw fell by just 1.2% y-o-y.

In Gdańsk saw the biggest house price fall of 5.9%, to an average price of PLN5,472 (€1,303) per sq. m. In Poznań house prices fell by 2.5% y-o-y to PLN 5,250 (€1,268) per sq. m. In both Cracow and Łódź house prices fell just 1.1% y-o-y.


House prices in Poland have been falling since mid-2008. According to Ober Haus, compared to pre-crisis peaks:

  • In Warsaw, house prices are down by 15.8%
  • In Cracow, house prices are down by 21.1%
  • In Poznań, house prices have fallen by 30.7%
  • In Gdańsk, house prices plunged by 30.3%
  • In Łódź, property prices plummeted by 36.9%

France house pricesPrice rises in the Polish property market have been driven over the past twenty years by the country´s strong economic growth. The boom period from 2004 to 2007 anchored the market’s turning point, fuelled by an increased inflow of investments (mainly due to the country’s accession to the EU), record low interest rates, and mortgage financing development.

Property prices suddenly surged in Warsaw by 23% in 2005, 28% in 2006, 45% in 2007, and 13% in 2008, according to REAS Some other cities such as Wroclaw saw even larger house price rises. But this market boom was immediately followed by a fall that continued for the next 6 years.

Analysis of Poland Residential Property Market »


RENTAL YIELDS
Last Updated: Apr 07, 2014



According to some indices residential prices are now rising once again in Warsaw. One reason – the data is confusing – may be that after a long period of price-declines, yields are now back to reasonable levels.

Apartments in Srodmiescie, which includes the historic neighborhoods of the Old Town (Stare Miasto) and the New Town (Nowe Miasto), are the most expensive in Warsaw.
Yet they are really not expensive, compared to the prime districts of other European cities. Srodmiescie apartment prices range from €2,662 to €3,108 per square metre (sq.m.), with gross rental yields ranging from 5.31% to 5.87%.

Mokotow, located just below Srodmiescie, houses many foreign embassies and companies. It ranks second in terms of property prices, after Srodmiescie. Prices for apartments here range from €2,037 to €2,880 per sq. m,.

Property investors can expect higher rental returns in Mokotow than in Srodmiescie on smaller apartments, whose rental yields average 7.32%.

Meanwhile, in the other popular Warsaw areas Ursynów, Wilanów, and Żoliborz, apartments are cheaper, ranging from €2,050 to €2,203. Property owners earn moderate rental returns, ranging from 5.51% to 5.83%.

In Krakow, average apartment prices range from €2,442 to €2,805 per sq. m. Apartment gross yields are a little less attractive year, ranging from 3.98% to 5.56%.

Read Rental Yields  »



TAXES AND COSTS
Last Updated: Jun 17, 2014



Rental Income: Net rental income is taxed at progressive rates, up to 32%.

Capital Gains: Capital gains incurred on properties sold within five years of acquisition are taxed at a 10% flat rate. Capital gains incurred on properties sold after a 5-year holding period are exempted from capital gains tax.

Inheritance: Gifts and inheritances of Polish property are taxed at progressive

Residents: Residents of Poland pay taxes on their worldwide income at progressive rates, up to 32%.

Read Taxes and Costs  »



BUYING GUIDE
Last Updated: Jun 18, 2014



Roundtrip transaction costs, i.e., the cost of buying and selling a property, are around 5.35% to 31.2%, with all costs falling on the buyer. For residential apartments, real estate agent’s fee is typically 3%.

Read Buying Guide  »



LANDLORD AND TENANT
Last Updated: Jun 30, 2006



Rent: Rents can be freely negotiated between landlord and tenant. Rent indexation clauses are legal.

Tenant Security: However, the general situation over rental laws is worryingly unstable. Strict re-regulation of the rental sector was recently legislated by Parliament. Fortunately, it was declared unconstitutional shortly after coming into law. Populist pro-tenant feeling is strong.

Read Landlord and Tenant  »



ECONOMIC GROWTH
Last Updated: Oct 18, 2014


Poland's economy has been strong, but risks are increasing

Poland GDP inflationPoland, which does not use the euro, has grown faster in recent years than any other EU member, owing to its large internal market.

It is the only European country which avoided recession during the global financial and economic meltdown. The Polish economy expanded by 5.1% in 2008, 1.6% in 2009 and 3.9% in 2010. GDP grew by 4.5% in 2011. However during the past two years growth slowed to 1.9% in 2012 and 1.6% in 2013.

However Poland cannot escape the slump in the Eurozone, which accounts for over 50% of Polish exports.

Poland’s economy expanded by 3.3% on an annualised basis in the second quarter of 2014, a jump from the 0.8% during the same period in 2013 but a slight decrease from the previous quarter. HSBC has downgraded its growth forecast for 2014 and 2015 to 3.1% and 3.4%, respectively. According to the bank, prospects of closing the output gap, bringing inflation back to target and normalizing interest rates are more distant now than a few months ago. And risks for the next year are increasing.

The government’s budget deficit is at worrisome levels and consumer spending, which fueled the Polish economy early in the crisis, has begun to slacken. Core inflation fell 0.3% in August, one of nine European states to see prices fall over the past year, according to the OECD.

It looks like a couple of difficult years ahead, but Poland's underlying economic momentum seems strong.







  • Low transaction costs
  • Strong post-transition economy
  • Low to moderate rental yields
  • High rental income tax
  • Strong pro-tenant sentiments
RESIDENTIAL PROPERTY FACTS
Price (sq.m): €3,108 For a 120 sq. m. property, usually an apartment.
Rental Yield: 5.51% For a 120 sq. m. property, usually an apartment.
Rent/month: €1,711 For a 120 sq. m. property.
Income Tax: 17.44% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 18.28% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: n.a. Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Neutral Rating is based on a detailed study of each country’s law and practice.

Residential Market in Poland Q4 2013 - REASBaltic property back! Q1 2014 - NewsecPoland Report Q1 2014 - REASBaltic States Capitals 2014 - Ober HausScandinavia Property Report Q4 2014 - Newsec



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