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Fears Over Poland's Housing Bubble...

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http://www.iht.com/articles/2007/04/18/bloomberg/bxatm.php

WARSAW: Shares of home builders are up more than any other industry on the Polish stock market during the past year, but rising costs are clouding the future.

Industry profit will be hurt by rising costs for materials and wages as emigration shrinks the work force, said Tomasz Adamus of Credit Suisse Asset Management Polska.

The shares of builders like Dom Development and Echo Investment have gained, helped by a doubling in house prices in Warsaw since Poland joined the European Union in May 2004. Home values rose more than 50 percent during the past year, according to redNet Property Consulting, a Warsaw research firm.

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Dear God is nowhere immune from this disease? How those poor Poles must be dancing in the streets at the news that buying a house or trading up is moving out of their reach due to reckless lending and speculation - mostly by foreigners I guess.

I read in the Times on Sunday that Sarkovy (?) is planning to give tax relief against mortgage payments in order to give the housing market a 'boost' in France. It's just suffered years of double digit inflation easing to 7% last year and now the twa* wants to pump it up again - WTF !!! It seems to be almosty universal economic policy now to pump up economies by creating assett bubbles.

No need to invest in R&D, develop new product and be innovative and do some actual blo*dy work - no all you need do is borrow like its going out of fashion and speculate. Think he has been talking to Blair too much.

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Guest vicmac64
Dear God is nowhere immune from this disease? How those poor Poles must be dancing in the streets at the news that buying a house or trading up is moving out of their reach due to reckless lending and speculation - mostly by foreigners I guess.

I read in the Times on Sunday that Sarkovy (?) is planning to give tax relief against mortgage payments in order to give the housing market a 'boost' in France. It's just suffered years of double digit inflation easing to 7% last year and now the twa* wants to pump it up again - WTF !!! It seems to be almosty universal economic policy now to pump up economies by creating assett bubbles.

No need to invest in R&D, develop new product and be innovative and do some actual blo*dy work - no all you need do is borrow like its going out of fashion and speculate. Think he has been talking to Blair too much.

If this is the case then they are trying to crash world money systems?????

What crime would this constitute?

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The Polish property market is very healthy and why shouldnt it be? The days of them being a second rate country are over.

A shrinking 'construction workforce' yes, but the cities are seeing massive emigration from the countryside as they like everyone else becomes urbanised. With a capital city making up a mere 5% of their population Warsaw is set to double in the next few years-

http://www.ober-haus.lt/pages.php/021801

A good place to buy.

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I have been to Krakow a number of times this past two years and property is expensive.

The locals must be completley priced out either that or the banks are lending at staggering multiples, either way another market ripe for correction and rightly so to address the difficulties for the locals who simply want to live and have a home.

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If you think the situation is ripe for a crash in the UK, here are the "bear" facts for Poland. I know because I live here. I am almost priced out, and I earn a UK salary!

Average salary: 6000 pounds per annum

Average house price: don't know the exact stats, but a two bedroom flat where I am living (Gdansk) is around 80,000 pounds in the ordinary districts, and well over 100,000 in the nice districts. A house, in the UK sense, would be 150,000 easily (but they are a bit bigger!)

Banks offering 130%, 50 year mortgages...

Mortgages have only been available for 4 years, so no one knows what negative equity is...

Rental yields close to zero... the place I am renting would cost me twice as much in mortgage repayments...

Since 2005, house prices have more than doubled in many areas...

I bet it's those pesky UK BTLers doing the damage, my local estate agent says that almost 20% of properties here are sold to UK/Irish citizens... so if the UK crashes, I might just be able to afford a place here!!

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The Polish property market is very healthy and why shouldnt it be? The days of them being a second rate country are over.

A shrinking 'construction workforce' yes, but the cities are seeing massive emigration from the countryside as they like everyone else becomes urbanised. With a capital city making up a mere 5% of their population Warsaw is set to double in the next few years-

http://www.ober-haus.lt/pages.php/021801

A good place to buy.

BTL cheerleader scum!!

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Was there - in Polska - and shop workers were earning 150-200 squid a month and food and other stuff was only about 25% less than UK (if you were lucky! - some stuff, such as electrical equip was v pricey).

1/4 of the workforce is abroad.

Not sure why there isn't a revolution - corruption is rife - the people are little more than existing on the whole, other than their mafia-elite.

Edited by gruffydd

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Prices doubled since 2004 in Poland? Makes the immigration/housing shortage theory look a bit weak doesn't it? It's all about speculation

Actually part of the reason for the fast price rise is the easy availability of credit and very low interest rates (3.8% for Zloty, 1.8% for Swiss Franc).

As I said, mortgages have only just become available, everyone is bullish about the future and getting in deep. No one has ever contemplated the possibility that house prices may also go down...

There is also mass histeria... buy now or you will never have your own place. Strange parallels?

Edited by Polish Bear

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So, the polish people I knew who came out to southampton to work about 2 years ago to save up to buy a house, would have been better getting a huge loan to buy a place, and then coming out to the UK to pay it, instead of burning up their money not being able to find jobs.

They must be incredibly cheesed off.

btp

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Poland house sales fell dramatically in 2005 from record 2004 levels. I can't be bothered going into the rest of the bull5hit in relation to the misinformation peddled re. property values in Poland, Estonia etc and why the press, ably aided by one or two multi forum/multi ID personalities, keep 'banging on' about it. Mugs if you buy there, even bigger mugs if you fall for the level of bull5hit. Reference material here:

http://www.stat.gov.pl/gus/index_ENG_HTML.htm

Edited by Converted Lurker

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So, the polish people I knew who came out to southampton to work about 2 years ago to save up to buy a house, would have been better getting a huge loan to buy a place, and then coming out to the UK to pay it, instead of burning up their money not being able to find jobs.

They must be incredibly cheesed off.

btp

Err yes.

And the people they were renting off over here probably saw that they would be returning home to buy themselves and beat them to it - purchasing (well borrowing more probably) using the leverage from the increased house prices and rental money.

You couldn't make this shell game up.

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Dear God is nowhere immune from this disease? How those poor Poles must be dancing in the streets at the news that buying a house or trading up is moving out of their reach due to reckless lending and speculation - mostly by foreigners I guess.

I read in the Times on Sunday that Sarkovy (?) is planning to give tax relief against mortgage payments in order to give the housing market a 'boost' in France. It's just suffered years of double digit inflation easing to 7% last year and now the twa* wants to pump it up again - WTF !!! It seems to be almosty universal economic policy now to pump up economies by creating assett bubbles.

No need to invest in R&D, develop new product and be innovative and do some actual blo*dy work - no all you need do is borrow like its going out of fashion and speculate. Think he has been talking to Blair too much.

Prices must be going up there due to lack of supply and mass immigration... oh, hang on...

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Guest Charlie The Tramp
Actually part of the reason for the fast price rise is the easy availability of credit and very low interest rates (3.8% for Zloty, 1.8% for Swiss Franc).

Are there not problems now lurking in the wings ?

http://www.telegraph.co.uk/money/main.jhtm...19/ccview19.xml

The world scarcely noticed when Switzerland raised interest rates last week to 2.25pc, but Hungarians, Poles, Romanians, and Balts most certainly did. Their mortgage payments have just gone up again for the seventh time.

In one of the weirdest twists of hedge fund globalism, Swiss loans are now funding the housing booms of Eastern Europe. This is Europe's match for sub-prime folly in America, and just as dangerous.

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I am really staggered at the house prices here, particularly in relation to average wages.

But then interest rates are very low, so mortgage repayments are still affordable. And again, no one here knows what it feels like when interest rates rise... there will be real carnage here!

Banks are being very loose with the credit, my mortgage limit was calculated at 9 times my annual income - and I am self employed.... shocking!!

Other risks.. many people have taken out loans in Swiss Francs and Euros... so they are exposed to exhange rate fluctuations (although at the moment the zloty is strong, so the gamble is paying off for now).

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Are there not problems now lurking in the wings ?

http://www.telegraph.co.uk/money/main.jhtm...19/ccview19.xml

"The markets seem to assume that the Swiss National Bank will keep supplying cheap credit for ever. Inflation has slipped back to zero, so rates will stay low, or so they think. Jean-Pierre Roth, the SNB's president, has been trying to disabuse the markets of this illusion in speech after speech. The exchange rate is "out of line with economic fundamentals," he says.
"The current interest rate level is not high enough to ensure price stability in the medium term."
Or board member Thomas Jordan: "The weaker the franc gets, the higher the risks investors take when they engage in new carry trades. A sudden appreciation of the franc would lead to heavy losses. I am not sure all the market participants are aware of the risk," he says."

.... Precisely....

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Hmm...thanks for the info it's an interesting thread and you have confirmed my suspicions.

I have spent some time working in Krakow my girlfriend lives in the city and know too well how expensive houses are in Poland.

I feel for people there with a mortgage because no matter how people here moan about Poles coming to theUK the damage we have helped inflict on them with our dopey arsehole speculators buying up anything that moves, and the usual unscrupulous banks credit fiasco will cripple them financially for life.

I am really staggered at the house prices here, particularly in relation to average wages.

But then interest rates are very low, so mortgage repayments are still affordable. And again, no one here knows what it feels like when interest rates rise... there will be real carnage here!

Banks are being very loose with the credit, my mortgage limit was calculated at 9 times my annual income - and I am self employed.... shocking!!

Other risks.. many people have taken out loans in Swiss Francs and Euros... so they are exposed to exhange rate fluctuations (although at the moment the zloty is strong, so the gamble is paying off for now).

Edited by FernandoMorientes

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Dear God is nowhere immune from this disease? How those poor Poles must be dancing in the streets at the news that buying a house or trading up is moving out of their reach due to reckless lending and speculation - mostly by foreigners I guess.

Pole dancing? :blink:

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I mean wow, comparing wages to house/flat prices the yields must seriously negative and gap looks to be such a chasm that it could take a decade of hypergrowth to catch up. The investors must be making a pure irrational, illogical punt and that unwinding is going to be seriously messy. :ph34r:

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I lived in Poland for a year, 1995 to 1996, and owner-occupiers didn't exist. Everyone I knew lived in long-term rentals. Mind you, the average size of flats in the town I lived makes new builds here look spacious - I lived in a "large" family flat (tiny living room, 2 minute bedrooms, and cupboard-sized bathroom and kitchen) as opposed to a "small" family flat - the same, with 1 minute bedroom instead of 2.

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I read in the Times on Sunday that Sarkovy (?) is planning to give tax relief against mortgage payments in order to give the housing market a 'boost' in France

Similarly I would expect the Great Gordo to do the same if things start to falter here

Brown has said he will "put housing at the centre of his premiership" - Brownspeak for 'the housing market is the most important thing for Labour' and that he will do all in his power to prevent it stalling/crashing

Mark his words - just as he said 10 years ago "no return to boom and bust" - brownspeak for we'll only have the boom part, IMO his recent housing comments are just as pertinent - be warned

Watch him cancel HIPs to kickstart the market this summer

IMO [bar an external economic shock, which Brown & MPC in any case would do all they can to minimise effect of] the longed for crash is way off. MPC will be ordered to stay behind the cyrve as inflation and IR's slowly rise, while the other half of the "independent Bank Of England" - the non-independent FSA will be under orders to allow banks to continue to loosen lending criteria

In the black and white world of Brown, you're either on the ladder, or on a waiting list for Milton Greens his new cardboard eco-town

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Guest Cletus VanDamme

All slowly falling into place - disenfranchised, property-less, global workforce working for a small but global property-owning elite.

You should read Neal Stephenson's The Diamond Age. Was written long before anyone had even considered this as a future outcome.

Just as the cyberpunk authors predicted the rise of the Internet, so the steampunk authors have predicted the rise of neo-Victorianism.

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All slowly falling into place - disenfranchised, property-less, global workforce working for a small but global property-owning elite.

You should read Neal Stephenson's The Diamond Age. Was written long before anyone had even considered this as a future outcome.

Just as the cyberpunk authors predicted the rise of the Internet, so the steampunk authors have predicted the rise of neo-Victorianism.

The Diamond Age has virtually nothing to do with property; far more to do with education.

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