It is often so very difficult to find reporting about Central European issues, especially when there is an inference of Polish involvement, that is either accurate or up to date. Certainly it is very hard to find anything that matches my own personal experience, so either my experience is a bit weird or people are doing a bad job of reporting. It was with expectations of something better then, that I turned to the august journal of the RICS the inspiringly named “Business” and an article by none other than Professor Stuart Durrant – visiting senior lecturer of Real Estate Studies at the CEU Business School, Hungary. You can read the article yourself by clicking here – ARTICLE.
The article is positioned as a ‘regional focus’, the region being CEE and although it generally does a reasonable job of allocating problems to specific countries there are a few things that are simply wrong. My suspicion is that either the good professor is trying to write about CEE from a very Hungarian position, or this article was written many years ago and has been brushed up and reprinted. Another possibility is that he’s adjusting the facts to better match his assertion that CEE is fairing better than the west because they weren’t so greedy with property prices. Let me give you some examples:
However, in these nations the ability to buy one’s own house has never been considered a God given right but something that has to be earned – if necessary, the hard way. The role of banks and their interaction with consumers reflects this. Would be purchasers behind what used to be called the Iron Curtain have had neither the inclination, nor the opportunity, to indulge in such an orgy of price speculation as their western counterparts.
The issue of house prices has never been a vital element of dinner party conversation in CEE as, for most buyers, a transaction in the housing market is something born of necessity and amenity, not vanity and speculation. In previous generations this approach seems to have held true in western developed nations too, with a greater emphasis on prudence than profligacy, yet successive generations have increasingly turned to the housing market as a means of self-validation and self-enrichment.
I would agree with the last sentence but not with the preceding passages. The issue of house prices is VERY MUCH a vital element of conversation at dinner parties in Warsaw. It is almost the first subject to arise after all the niceties are dispensed with. Also, purchasers in Poland certainly do have the inclination and the opportunity to indulge and as many of them as can afford to, have done.
As house prices begin their inevitable descent to sustainable long-term levels in the west, they have been, in real terms, largely stable over the past few years in Hungary and many other nations in the region. There was an asset spike in the residential market in the years leading up to EU accession in some countries, but most of the speculative money came and went in the space of a few short years, and any real substantial asset gains were largely eroded by high inflationary environments coupled with weakening currencies.
House prices have been stable here in Poland – news to me! The spike leading up to EU accession, if indeed there was one, was a drop in the ocean compared to the spike between say 2005-2009. If prices here have remained largely stable then how does he think projects like Złota 44 ever got past the drawing board?
Apart from this, overdraft facilities and real (unsecured) credit cards are extremely rare as the average CEE consumer conforms to the sentiments expressed in Shakespeare’s Hamlet: “Neither a borrower nor a lender be; For loan oft loses both itself and friend.”
True as it may be that Poles are, for the moment at least, are more sensible than their western counterparts, it is not true to suggest there are no real credit cards or overdrafts here. Utter nonsense in fact. Ten years ago this was true but not today and not for the last 3-5 years either.
There is also a very common tendency in CEE for buyers to purchase bare land and build their own homes over an extended period. Cute and archaic maybe, but effective and prudent for sure.
I’m not sure I like the condescension that comes through in the use of “cute and archaic” here. If there was any land available in the UK for a vaguely sensible price they’d be doing the same thing for goodness sake!
The implications of the global credit crunch will take different forms in different markets. Consumers and providers in the west and east alike will have to tighten their belts – unemployment will rise, luxuries will have to go, and budgets will have to be re-thought. However, austerity can also be seen as the chance to return to the simple pleasures of life, many of which were never abandoned by the citizens of CEE countries.
Amen to that, brother!
In the magazine (and in the online link), this article is followed by one from Michael Ball, director of the Urban and Property Economics Consultancy Ltd and professor of Urban and Property Economics, University of Reading, where he analyses the CEE housing review. Sadly, this goes from a CEE headline to a lot of talk about Hungary. Why not just call it a Hungarian review?
The following page highlights our very own Złota 44 as an example of CEE residential developments. Ooops!
By this point I was beginning to lose faith in the reliability of what I was reading.