Poland

Poland’s property market remains weak, with the domestic economy slowing, mainly due to the eurozone debt crisis.

During the year to end-December 2012, the average price of apartments in Warsaw, dropped by 2.49% to PLN8,002 (US$2,565) per square metre (sq. m), according to Ober Haus. House prices in other Polish cities fell more.

Both Lodz and Gdańsk saw house prices falling 6.6% y-o-y in December 2012, to PLN3,814 (US$1,222) and PLN5,695 (US$1,825), respectively. In Cracow, house prices fell by 4.6% to PLN6,688 (US$2,144) while house prices in Poznan dropped by 4.4% to PLN5,450 (US$1,747).

House prices in Poland have been falling since mid-2008. Compared to pre-crisis peaks:

• House prices in Warsaw are down by 13.1%
• In Cracow, house prices are down by 17.9%
• In Poznan, house prices have fallen by 28%
• In Gdańsk, house prices plunged by 27%
• In Lodz, property prices plummeted by 35.7%

Poland’s property market is expected to remain weak in 2013, as unemployment rises to a record high.

In 2012, the total number of dwellings completed increased by 16.5% to 152,527 units from a year earlier, based on preliminary data released by the Central Statistical Office (CSO). However, the number of permits granted dropped by 10.3% y-o-y to 165,092 in 2012, while dwellings under construction fell by 12.6% y-o-y to 141,798.

Total outstanding housing loans increased a meagre 0.2% to PLN320.5 billion (US$102.7 billion) in November 2012, from the same period last year, according to the National Bank of Poland (NBP). 44% of housing loans were denominated in zloty, with Swiss Franc-denominated housing loans accounting for 46%, while the remaining 10% were denominated in other currencies.

The average interest rate for outstanding zloty-denominated housing loans was 6.9% in November 2012, up from 6.7% at end-2011, and 5.9% at end-2010, according to the NBP.

“The [property] market hasn’t rebounded completely and prices may drop further still,” said Marcin Plazinski of Emmerson Real Estate. “Because some property developers anticipated a recovery in 2010 and 2011, they embarked on development projects, adding to the oversupply of housing.”


The Polish economy was estimated to have expanded by just 1.5% in 2012, the lowest level since 2002, according to the NBP. The economy grew by 4.3% in 2011, 3.9% in 2010, 1.6% in 2009 and 5.1% in 2008, according to the International Monetary Fund (IMF).

The country’s annual unemployment rate inched up to 13.3% in December 2012, the highest since 2006, based on preliminary estimates from the Ministry of Labor and Social Policy.

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Poland is Europe’s sixth-largest economy, with a population of about 38.2 million and a GDP per capita of US$12,302 in 2012, according to the IMF.

Poland is the only European country which avoided recession during the global financial and economic meltdown. The economy expanded by 5.1% in 2008, 1.6% in 2009 and 3.9% in 2010. GDP grew by 4.3% in 2011, mainly due to strong domestic demand.

However Poland is now feeling the pinch of the eurozone debt crisis, with domestic demand and investment declining. In the third quarter of 2012,  GDP growth unexpectedly slowed to 1.4% from a year earlier, from 2.5% in Q2 and 3.5% in Q1. Domestic demand dropped by 0.7% y-o-y in Q3, from a decline of 0.4% y-o-y in Q2 2012.  In 2012, the economy expanded by just 1.5%, the lowest since 2002, according to the National Bank of Poland (NBP).

The Polish economy is expected to grow by 2.2% in 2013 (government forecast). But others are more pessimistic. The OECD projects that Poland’s GDP growth will slow to 1.6%. Capital Economics expects growth of just 1%.

As the slowdown bites, companies are announcing layoffs. In 2012 the number of unemployed rose by 154,900.

Unemployment inched up to 13.3% in December 2012, the highest level since 2006, based on preliminary estimates from the Ministry of Labor and Social Policy - a sharp contrast to the average 2007 to 2011unemployment rate of 8.8%. In the first nine months of 2012, about 614 companies declared bankruptcy, the highest level since 2005, according to the debt collectors Coface.

To help the Polish economy:

• In January, the NBP cut its benchmark interest rate by 25 basis points for the third consecutive month to 4% to stimulate economic growth.
• The same month, the IMF approved the renewal of Poland’s US$33.8 billion Flexible Credit Line (FCL) for two years.

Inflation fell to 2.4% in December 2012, down from 2.8% in November 2012, and the lowest rate in 28 months. Inflation is expected to fall further to below 1.5% in 2013, according to the NBP.  Falling inflation suggests that more interest rate cuts will come soon.