With Europe in meltdown, is Poland an exception? Europe’s sixth-largest economy has strong domestic demand, and has not yet adopted the euro: so it was able to devalue the zloty to maintain competitiveness. Poland’s economy grew by 3.8% in 2011, and is expected to grow by 2.5% in 2012 and 2.5% in 2013 (OECD forecast November 2011).
Though private consumption is expected to slow, increased exports should compensate for weaker internal demand, and the budget deficit should fell from its present 5.3%.
Property slowdown worrying
Yet Poland’s housing market was Europe’s second-worst performer in 2011, down by 10.55% in inflation-adjusted terms.
Compared to pre-crisis peaks:
Though private consumption is expected to slow, increased exports should compensate for weaker internal demand, and the budget deficit should fell from its present 5.3%.
Property slowdown worrying
Yet Poland’s housing market was Europe’s second-worst performer in 2011, down by 10.55% in inflation-adjusted terms.Compared to pre-crisis peaks:
- House prices in Warsaw are down by 13.63% (13.53% in real terms).
- In Krakow, house prices are down by 11.80% (13.2% in real terms).
- In Lodz, prices have fallen by 17.87.% (17.67% in real terms).
- In Tri-City, house prices plunged by 25.22% (26.62% in real terms).
- In Wroclaw, house prices are down by 31.91% (31.81% in real terms).
- In Poznan, property prices plummeted by 44.08% (44.18% in real terms).
Analysis of Poland Residential Property Market »
RENTAL YIELDS
Last Updated: Apr 15, 2011
Poland’s property market has been recovering, but yields are still not very good.
In the upmarket central Warsaw district of Śródmieście, buying prices are generally over €3,100 per square metre. Gross rental yields in Śródmieście vary between 4.9% and 5.4%, depending on size (smaller units yield more).
In other areas of Warsaw researched (Mokotów, Ursynów, Wilanów, and Żoliborz) there is a considerable range of prices, from about €2,400 per square metre to €2,800 per square metre. Average yields here are lower in these districts than last year, ranging from 5.1% to 6.2%.
Apartments in the charming historic and student city of Krakow range from around cost an average about €2,700 per square metre to €3.000 per square metre, higher this year than last. Yields in Krakow range from 3.4% to 5.1%.
“Residential units are probably overvalued to some degree,” says REAS, Poland’s leading research-oriented real estate agency. We agree. However the overvaluation is not serious, Poland’s economy is improving, and the country’s mood is upbeat.
In the upmarket central Warsaw district of Śródmieście, buying prices are generally over €3,100 per square metre. Gross rental yields in Śródmieście vary between 4.9% and 5.4%, depending on size (smaller units yield more).
In other areas of Warsaw researched (Mokotów, Ursynów, Wilanów, and Żoliborz) there is a considerable range of prices, from about €2,400 per square metre to €2,800 per square metre. Average yields here are lower in these districts than last year, ranging from 5.1% to 6.2%.
Apartments in the charming historic and student city of Krakow range from around cost an average about €2,700 per square metre to €3.000 per square metre, higher this year than last. Yields in Krakow range from 3.4% to 5.1%.
“Residential units are probably overvalued to some degree,” says REAS, Poland’s leading research-oriented real estate agency. We agree. However the overvaluation is not serious, Poland’s economy is improving, and the country’s mood is upbeat.
TAXES AND COSTS
Last Updated: Jan 05, 2012
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%.
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%.
BUYING GUIDE
Last Updated: Mar 29, 2007
Roundtrip transaction costs, i.e., the cost of buying and selling a property, are around 5.5% - 9.9%, with all costs falling on the buyer. For residential apartments, real estate agent’s fee is typically 3%. Civil Transaction Tax of 2% is paid on transfer of second-hand buildings. Reduced VAT of 7% is levied on transfer of new-build residential property until 31 December 2007.
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.
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.
ECONOMIC GROWTH
Last Updated: Feb 27, 2012
Poland expects a surge in economic growth
Europe’s sixth-largest economy has strong domestic demand, and has not yet adopted the euro: so it was able to devalue the zloty to maintain competitiveness. Poland’s economy grew by 3.8% in 2011, and is expected to grow by 2.5% in 2012 and 2.5% in 2013 (OECD forecast November 2011).
Though private consumption is expected to slow, increased exports should compensate for weaker internal demand, allowing the budget deficit to fall from its present 5.3%.
Workers are moving back to Poland, according to recent OCDE data. Unemployment was 9.6% in 2011, and is expected to rise to 9.9% in 2012, but this is lower than in many European countries.
In January 2011 the Poland National Bank set out on a moderately restrictive path that has not yet been reversed, holding the reference interest rate steady at 4.5%.
The result of these measures is that loan volumes are expected to decrease considerably, according to a National Central Bank January 2012 survey:
Poland’s relatively strong economic position is highlighted by Bloomberg, which calculates that Polish government bonds provide a better risk-adjusted return than German Bunds and US Treasuries.
Though private consumption is expected to slow, increased exports should compensate for weaker internal demand, allowing the budget deficit to fall from its present 5.3%.Workers are moving back to Poland, according to recent OCDE data. Unemployment was 9.6% in 2011, and is expected to rise to 9.9% in 2012, but this is lower than in many European countries.
In January 2011 the Poland National Bank set out on a moderately restrictive path that has not yet been reversed, holding the reference interest rate steady at 4.5%.
The result of these measures is that loan volumes are expected to decrease considerably, according to a National Central Bank January 2012 survey:
- 86% of senior loan officers at banks expect loan grant standards to be tightened further in Q1 2012
- 40% say the tightening will be "considerable".
Poland’s relatively strong economic position is highlighted by Bloomberg, which calculates that Polish government bonds provide a better risk-adjusted return than German Bunds and US Treasuries.
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