Warsaw’s property market

Take a deep breath, this is a long post!

It’s almost exactly three years since I last pontificated (on 20 east) about the housing market in Poland. The question is, has anything much changed since then? A question particularly important to my family right now as we have recently started looking for somewhere to buy.

Well, without wishing to boast, I think pretty much everything has gone as I anticipated. I said “The prices are not going to rise over the next 3 years, possibly longer. My gut feeling is that prices will in fact decline overall and in some cases (location, quality) quite considerably,…” and that’s certainly true but I think there is still further to go. Judging by the amount of property there is for sale, apparently much higher than number of people buying, prices should be lower. A quick scan of one of the real estate web sites shows a total listing of 143,377 apartments for sale in Warsaw and 19,157 houses. Just over 3,000 of the apartments have been added to the list, or updated, in the month of June. My bet is that most of the updating was lowering of prices.

The market today is split into two types of seller –

  • those who wish someone would pay them the price they’d like to get.
  • those who seriously want to sell their property.

If you spend enough time browsing the offers it is easy to distinguish between the two. Type 1 seller is calculating the asking price by inflating their original investment by 30-50% to cover the Swiss Franc factor and then adding the total cost of their, often times, extravagant ‘remont’ (fit-out). Type 2 are pricing their property according to current market conditions. Having the two types of seller leads to some extremely unfathomable pricing. On our own estate for example, there are a few apartments for sale and the range is between 18,229 and 10,708 (negotiable) per sq m with the majority gathered around 12,500. In the estate we used to live you can find prices ranging from 7,229 (negotiable) to 15,041 per sq m but the most extreme case of price fluctuation is a block close to Łazienki park where some will pay 18,000 while others pay 53,000 for a square metre in the same block! It is a similar story all over Warsaw. There is no significant difference between these apartments, it is simply the type of seller that is making the difference in the price and the mistaken belief that “if someone likes it they will pay my price”.

When we were looking to move last time, the owner of our last apartment made us a ‘special offer’ to buy the place at 9,000 per sq m. It might have seemed a good offer at the time as prices were heading to 11,000 and beyond but I wasn’t convinced and we didn’t buy. I think you’d be lucky to sell that place for 8,000 today and I still think the prices on that estate have room to drop further as better quality and better located apartments are added to the available stock.

Confused? You will be!

Fear not though, if you’ve just arrived from Moscow determined to show what a man you are, Warsaw is not going to let you down. There’s a choice of at least ten apartments costing over 10 million zlots. Yes, 10 million – that’s more than 2 million quid and more than 3.5 million bucks. Go take a look at what you can buy in London and New York for that money and then compare it to the Warsaw options, you’ll be amazed. If your budget is a little more modest, 2 million zlots say, then the choice is far greater with something around 150 apartments to choose from and plenty of houses too.

In 2008 I also expressed a deal of skepticism about the availability of mortgages in any currency other than that of the country, zloty. Swiss Franc mortgages were all the rage 3 years ago with banks flashing sheets that showed that the franc had been reliable as a cuckoo clock for the last thousand years and the low interest rates made repayments much lower. How times change, the same bank that was trying to flog me Swiss Francs 3 years ago is today only offering mortgages in zloty. Most other banks have also ditched the franc. The exchange rate between zloty and franc has drifted considerably in the wrong direction from its long established rate meaning that many are now paying much more each month than they ever intended to. In other words, the price of their property in zloty terms (i.e. real terms) is 30-50% more than they thought they were paying. I still hear people suggesting the Swiss Franc might be a good option as the rate is now so unfavourable that it can only get better. In my opinion, if it can swing from 2.2 to 3.5 then there’s at least as much chance that it will reach 4 or more as there is it will return back to 2.2.

The other currency possibility is the Euro but given whats happening in the Eurozone right now I think you’d have to really enjoy gambling to try that out.

It is astounding that the mortgage currency issue has not made more headlines. If the franc keeps getting worse this could become a very significant problem. I think it’s fair to say that even with the poorer rate, mortgages are still more expensive in zloty but that’s not the point, it is the stability of what is likely to be your biggest monthly bill that’s important.

Let’s look at location and what’s available.

I think a fair generalisation is that all the developers took a couple of years off and then some of them started again within the last 6-9 months. There is a fair amount of new stock coming into the residential market now and as usual most of it is 50-90 sq m in large blocks. Nothing new there then! The prices, however, are new. If you had tried to predict 3=4 years ago the price of the developments going up now you’d have said something around 12,000 per sq m. The headline prices are actually about 8,000.

Despite the renewed activity it is still largely the same boring stuff as before. We were hoping that a little more imagination had crept into the market, nice lofts in trendy Praga for example, but it seems not. There are plans for lofts in Praga but you’ll have to wait a few years more before you can buy one.

Maybe when I'm dead and gone you can buy one of these in Warsaw.

Our search so far has covered quite a wide area from the city centre to just outside the Warsaw boundaries in the North, places like Łomianki, Kiełpin, Dąbrowa. The favourites are the area we currently live, Młociny, which is where Zosia has her school and Żoliborż. The trouble with both areas is that they are not cheap and they have limited supply, which is why we’ve widened the search area.

We like the city centre and could afford a good quality apartment of a size big enough for most families. However, we’d have to move Zosia to a different school and that’s not a great idea as she’s very happy where she is now. Also, although 90+ sq m is plenty of space we’ve got used to more than 150 and so anywhere less than 120 feels cramped and will not work well with our furniture. As mentioned earlier, we like what’s happening in Praga but there’s very limited stock available of the sort of thing we’d invest in.

The most surprising thing has been the difference between being in Warsaw and being outside. We live just within the northern border of Warsaw but if you drive 5-15 minutes north you have districts such as Łomianki, Dąbrowa, Kiełpin and so on. The drop in price between Młociny and these places just outside the border is amazing considering the very short distance. Given that for us the first stop in the morning for us is Zosia’s school, the difference is between spending 5 minutes to drive Zosia to school versus 20 minutes (traffic willing). For that small amount of daily pain you can save around 500,000 zeds on a like for like basis!

A real life comparison of the difference – two places we have viewed and considered:

PROPERTY ONE – An apartment in Warsaw, Zoliborz, on a pretty good quality development not high rise but still a fair number of residents. Apartment is 103 sqm with a roof terrace of 106 sq m. It is offered in developer’s standard finish, i.e. all you get are the walls, windows and a front door. Next door to Bielanski forest on one side but also next door to the busiest road in Warsaw, an office block and a small bus depot on the other. The roof terrace was never meant to be one judging by the construction, the roof is finished in soft felt and you are surrounded by chimneys. To get to the roof they have stolen space from the lounge to build a staircase making the lounge smaller than it should be for the size of apartment. The only way to get two underground parking spaces is to have one behind the other so the front car is always blocking the back. There’s no space to park on the street either or anywhere nearby as all the pavements have been planted with stripey bollards. There’s also no basement store rooms available now. Price after negotiation (150,000 saving) was 1,356,000. Add to that around 400,000 for finishing the place and you can move into a finished apartment for about 1.75 million.

PROPERTY TWO – A detached house outside Warsaw in Kiełpin, 12 km away from property 1. A nice small to medium sized, fenced, development. Better quality than many in that area. Plot of around 1,000 sq m with a decent looking house of circa 270 sq m. We’ve looked around a couple of identical places that were finished and you can create a very nice living space. Also offered in developer’s finish. Downside of not knowing for sure what’s going to be built on adjacent plots & distance from Warsaw. Price before negotiation 1.1 million, say 1 million after some haggling. Cost to finish around half a million so you can move in for around 1.5 million.

A move of 12 km gets you a huge difference in living space and 250,000 in your back pocket. That’s a much bigger difference than I would have expected.

So to recap – prices have dropped but might have further to go in some cases, although there are still many owners who have not yet realised this. New development has started again. Mortgages are slowly becoming more sensible. Real imagination in terms of what is being built is still lacking.

What of the future? If I think prices might drop further you might ask why we are considering buying right now? Well, firstly I should define “drop”. Let’s say that I think the right price today is 10,000 a metre, there are approximately 15% of sellers who agree and whose property is priced accordingly. For the other 85% the price will drop, in actual fact they will lower their price to meet the reality of the market. The bigger question is whether my 10,000 will also drop. I think it might but probably not below 9,000 and not for very long. On the other hand I do think Poland is on a strong upward trajectory and things like next years football championships will only enhance the attractiveness of the Warsaw market so prices could start to rise again. In short, I think there’s more upside than downside, certainly over a 5-10 year time frame. One significant change is that I’ve given up being concerned that Warsaw property in its entirety is over-priced compared to other cities. It is and it probably always will be.

I also think my family have been patient long enough, twelve years is a long time to wait for a “place of their own”. I’m not getting any younger and can already only get a mortgage for 17 years (although some banks think I can work ’till I’m 80!). Surprisingly there is not a significant difference in cost over one of 30 years but nevertheless. Last but not least is the fact that our kitchen is rubbish and I’m not investing in a new kitchen for a rented flat!

HOT OFF THE PRESS – Since I started writing this post we have viewed and had an offer accepted on an apartment in Młociny. I’ll be back with more of the boring details as things progress.


22 thoughts on “Warsaw’s property market

  1. Dunno if we got to tell you last time we met up, but Paula and I bought a place about 250 meters away from where we rent right now. 66m2, plus some balcony space (not a great deal of it) and a garage. We paid about 400k PLN for the whole thing, in “Developer’s Finish” as you say. It On one side are a series of low blocks (2-3 floors) on a dead-end street, on the other is an empty field. Directly out the bedroom window is a big series of allotments. In the winter it’ll be pretty barren I think but in spring/summer it’s a lot of green. Big bonus is that we’re a 20-25 minute walk from work (door to door) or a 5-7 minute drive.

    We hired a small interior design/architectural firm to do some interior plans for us. They also provided an inspection person (inspection was just a week or so ago) who said the job was done very well. Few issues for the developer to correct and the developer has agreed to correct them all w/o fuss.

    Interior work ought to start in a few weeks – hopefully. We’ve got the keys for the place but haven’t signed off on the last of the paperwork so we can’t start yet.

    We got our loan in PLN, BTW. There was a great deal offered by the government – if I recall correctly, they kick in for part of the monthly loan payment for the first seven years for first time home-buyers if the loan is/was in PLN. At the time we were also considering a loan in EUR or CHF but the government deal meant PLN was competitive against CHF (six-eight months ago when we got the loan, that is). We figured we probably either wouldn’t have the place for more than about seven years and if we did we’d be earning more than enough at that point to cover the additional cost (something like 500 PLN/mo).

    The only thing that really sucks is that we’re already paying the loan back AND paying rent right now …and will be for at least a few more months.

  2. scatts – very thoughtful post as always.

    We have friends in Łomianki and they love it. He commutes downtown to a location not far from yours and says it is a breeze.

    Where we are in Konstancin it is quite nice but very pricey and a terrible commute to downtown as Michael will attest to.


  3. Very interesting post. One quibble. For 2 million quid in central London, you ain’t gonna get much. A nasty semi detached house – if you are very, very lucky.

  4. Name – I think you’d be surprised what you can get. Try this just for a quick example – http://tinyurl.com/6x3bmgf

    Three bedrooms, 154 sq m in Chelsea. (As a West Ham fan it pains me to type that word)

    Obviously, this is not as massive in pure square metres as you would get in Warsaw for the same money but then there’s a world of difference in what you would find when you take a short walk out from each apartment!

  5. Bob, for sure Łomianki is easier than from your end of town. Not as pretty, not with the fresh breeze of pine needles in the air but definitely easier commute.

    The exact story of how long it takes from Łomianki does however depend on who you talk to. I’ve heard everything from it taking 45 minutes just to get to Zosia’s school to it being as you say “a breeze” to get all theway into town.

  6. Brad, interesting. Wonder if the gov.tusk will chip in a few thou for our payments? Nobody has mentioned it yet, I’ll have to ask.

    6,000 a metre in Kraks – depending on the cost of the garage space. Closer to Warsaw prices than I would have thought.

    Good luck with getting the works done and stopping that double payment!

  7. Scatts – That’s quite impressive. I should move to London! (not that I could afford it, but still)

    Any idea what “Leasehold plus share of freehold” means – is that essentially for 99 years? In that case, it could explain the ‘low’ price…

  8. I believe the government offer was called “rodziny na swojem” – family on their own, in a sort of literal translation. I know of it as my wife and I also availed of it. However, I understood that the ‘offer’ expired as of December 31st 2010, so your timing might just have been perfect to get in on time.

  9. Scatts you should buy an apartament in the Powisle area. Zosia will love it in a couple of years. You do not believe it, but she will grow up sooner than later ;)

    I am not sure if buying an an apartament somewhere in the outskirts of Warsaw is such a good idea. She will need to take long rides with the the bus (during cold dark winters) from the city center/university/disco and so on and for you it should also be much more comfortable.

    And why Powisle ? because i think that the area along the Vistula river will become the most attractive in a couple of years. The water quality is improving very (In 3 yrs swimming should be possible) quickly and in 10-20yrs A house with a view on the river will be as attractive as let’s say in London or Budapest…

    here one example


    But there are many more (different developers and prices)

  10. guest, we have considered that area and there’s some merit in what you’re saying. I don’t think it’s for us right now although it is not totally out of the question.

    The problem as usual is finding apartments of a decent size and affordable price. 15,000 a metre (your first link) will get us about 100 sq m or less if you include cost of finishing it.

    The second link is very interesting as we like those “industrial” developments a lot. Trouble is that they are all “coming soon” and not available now, or even in the next couple of years I suspect.

  11. Yes, everything you write accords with our experience. We certainly saw a lot of places where the seller clearly didn’t much care what the market was like. It was frustrating, because you can’t always tell without visiting which places are poor value – there are some diamonds in the rough if you’re prepared to wear down the shoe leather.

    In the end, we went for the sort of bargain you can find outside the centre and bought a lovely 120 sq/m flat in Anin for only 5000 zl per sq/m. At that price, I was able to pay for the majority of it in cash and only have a small ten year mortgage that I plan to pay off in under five. It needs a remont, but it has decent wooden floors, which reduces the cost considerably.

    It’ll be a bit longer to get into work, but I can take the train and listen to my Polish audio course. There are plenty of schools and an excellent swimming pool nearby, though the shopping situation is a bit weak. Luckily neither of us are receational shoppers and there are enough decent places to get the basics.

  12. Scatts, this took my a while to get my act together and write a reply.

    Frankly speaking, I was a bit humped when I read this a couple of days ago. This post showed me bluntly this a blog for expats, well-off expats. At first I thought you were totally out of touch, but in fact you live in your own world with your dilemmas being far from ordinary Pole’s dilemmas and still different than Polish fledging middle class’ quandaries. This impression was incited by sqm prices. For most Poles prices of ‘standard’ properties – ca. 8,000 PLN are exorbitant and fewer and fewer people can afford to take out a mortgage to buy it, not to mention there are few and far between who can buy sth with their own cash.

    Now substative comments:
    1. Right prediction, and prices are going to decline over next 2 – 3 years, because:
    a) properties is Warsaw are still pricey and the more people realise it, the weaker the ‘demand side’ of the market is to push prices up, in the meantime more and more sellers want to fianlly dispose of their flats, the imbalance on the market is growing,
    b) creditworthiness criteria have been tightened, due to: (i) rising interest rates that send installments higher, (ii) lessons bank learnt from the crisis, (iii) recommendations issued by Polish financial supervision authority.

    2. If you wish to measure level of prices on the market, compare average sqm price to average salary. In Warsaw asking prices average out some 9,000 PLN and gross salaries is around 5,000 PLN, this gives some 3,400 PLN. I realise earnings of 5,000 PLN is a pittance for you, but for many people in Warsaw, mostly those who want to settle down here, it’s out reach!!!

    3. The prices from you estates you quote are generally absurd, but OK, if somebody wants to pay so mush, it’s theri business, but prices ranging from 11,000 PLN to 18,000 PLN or from 18,000 PLN to 53,000 PLN prove somethign’s wrong with the market.

    4. PROPERTY 1 – jaw drops open

    5. PROPERTY 2 – here the price is within reason

    6. Scatts, I don’t want to pass preconceived judgements, but you don’t appear to be financially prudent to have lived for 12 years in rented apartments (those weren’t tiny flats and rent charges weren’t low) if for some time you have known you would stay in Poland for good…

    I can only wish you well with a mortgage application, I was recently offered to have my creditworthiness examined for free and the outcome was that I can take up to 230,000 PLN for 40 years. Now think what I can buy for 230,000 PLN in Warsaw (OK, I have some savings so the price can be higher) and look at the prospect of paying off a tiny flat for 40 years and ending up in the eve of retirement with a 30-sqm flat in panel block building. Of course the assumption is flawed because my earnings will rise, but from the point where I am now things are rose-coloured.

    To recap, given the market environment, price should only decline…

  13. Guest, the machinery of propaganda does work…

    What does interview with Adam Hofman has in common with Warsaw property market?

    The except in the 10th minute about conspiracy of developers resulting in lack of council flats built at the cost of 2,000 PLN per sqm?

    I’d just like to remind you that property prices in Warsaw between the end of 2005 and the end of 2007 rose by 100%. Who was in power then?

  14. It is not a conspiracy.

    -odrolnienie gruntow
    -plany zagospodarowania
    -lower VAT

    and so on. makes property prices lower.

    But lower prices mean of course less VAT money for Mr.Rostkowski and a depreciation of their own land/houses value. Just look how much property politicians and their families are owning. Especially local PO-PSL politicians…

    And they simply do not want too much land on the market. Which is crucial if you want to stop immigration of younger people and families. But politicians give s* about it.

  15. Good to have another viewpoint, Bartek, even though I don’t agree with some of your more ’emotional’ outbursts.

    I’m a long way from being a ‘rich expat’ and frankly, if you stay in your banking industry and work as hard as I have for the last 30 years, you will almost certainly be earning more than I am when you’re my age so I’d save your judgements until then.

    On what evidence do you base your respective comments in points 4 and 5? (property 1 and 2)

    6. That’s a long story, actually one long story and two arguments about renting versus buying and financial prudence.

  16. Scatts, my first reaction, when I read it last Monday was indeed emotional. The outbursts above were put out by a totally sane chap who wanted to write sth provocative.

    Ian, I know, but the temptation to overdo was too hard too resist. I know with where I start from in 30 years I should climb higher. But there’s still long way to go. (may it be short of obstacles)

    Frankly speaking water went into my head. When in November 2010 I was offered my current job my earnings seemed to me sky-high. After six months of work they seem only very decent… And my needs are not much higher than they used to be (except for car maintenance expenses).

    Properties 1 and 2 – firstly common sense (how much I think these properties are worth), secondly keeping track of the market (at once a month read property ads to check what the level of prices is)

    Point 6 – OK, not my business, but personally I wouldn’t decide to rent anything, unless I planned to stay somewhere for a short period of time…


  17. Fair enough, Bart.

    Salaries should be higher here for the majority of people. I really hope that will change because it is a fundamental driver for so many things that will make Poland a better place.

    If there’s one piece of advice I can give you as your earnings increase it is to try and strike a cautious balance. Good long term planning (risk management) is where you can easily live on half of what you earn and tuck the rest away. Very sensible advice that I wish someone had banged into my head many years ago. Hard to carry out in practice though, I appreciate that.

    Properties 1 & 2. Whatever you or I think the prices should be seems to be irrelevant. Even more astounding is the way banks and valuers will blindly accept any price that a developer states but will generally not give you a proper valuation on any property on the second hand market thanks to “lack of data”. I’ll write more about this as it is quite ridiculous. So, if those are the prices from the developers then those ARE the right prices, according to banks and valuers. Property 1, there is a link here to apartments in Powisle area that start from 15,000 /m (they were much more than that) so the price of 13,000 ish might be considered by some to be cheap. Property 2, in Kiełpin, is much better value but then most of the people in Warsaw think Kiełpin is farmland 1,000 km from Warsaw and so it should be cheap!

    Too much personal opinion and not enough hard quantifiable, verifiable, data.

    Point 6. Life does not always follow the simple and sensible route you expected it to. Furthermore, I’d like to see you arrive in a new and strange country and immediately make the biggest investment of your life in buying some property despite the fact that you really do not understand the market nor the prices, which is essentially what you’re saying I should have done. Your argument is built on the basis that property values will always rise and surely the last few years here have shown you that this is a dangerous assumption.

  18. Scatts,

    Everybody would love to be paid more. Salaries must be linked to labour force efficiency, otherwise pay rises will only trigger inflation. You won’t get it round.

    Oddly enough, I do put aside half of my earnings, but this is quite easy because I live with my parents and give them token 500 PLN as my contribution for running the house and don’t spend much on various types of entertainment.

    A piece of advise for you – set up a savings account for Zosia and pay there some sums regularly. My parents did it and at the age of 18 I had enough money to buy a small brand new car. Then the money hasn’t been wasted and money produced money (compound interest rule).

    I don’t know much about blind acceptance of developer-set prices, but banks surely don’t put stock in valuers’ job. They (rzeczoznawcy majątkowi) have their professional standards they hardly ever abide to. Often their valuation reports are a piece of crap, but that’s a different story.

    Point 6 (this might soon become a “catch phrase”) – I know just upon arriving somewherea decision to buy something would be at least reckless. But when did you come to Poland? Wasn’t it around 1998? Only later on you got married and your daughter was born, in 2003. 2004 gave an excellent opportunity to buy something at pre-boom price. (OK, I’m giving up on preaching).

    There must have been some misunderstanding if you gathered I assumed property prices could only rise. I don’t believe and I think this belief is fundamentally flawed. I don’t want to treat a flat or a house as an investment that should bring a profit higher than a bank deposit. I would buy it to have my housing needs met and I wouldn’t care if the value went up or down. My parents bought their house in 2004. Price, finishing costs, bereaucracy-realted charges and interest on mortagage totalled to some 600,000 PLN. Three years later, at the height of property boom the market value of the house was some 900,000 PLN if not more, not I think it could be sold for 700,000 PLN. Were they any richer in 2007? Are they any poorer now? They don’t care, me neither, we have our housing needs met, this is the only point.

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