Polish property prices continue to fall

One of the considerations my wife and I discussed is whether or not to buy property in Poland when we arrived. When we visited Poland two years ago, we poked around on international real estate sites looking at properties (a derivative of our HGTV obsession) and noticed something interesting – a 2 bedroom flat in the historic district of a major city might cost you $150,000 to buy, but you could rent one for $500, cheaper than a mortgage payment! You’re not paying HOA fees or maintenance, either. How could you justify buying in this market? How does this happen?

Let’s take a step back. After the fall of communism in Poland, the government essentially just gave people the properties where they were living. There was a period of free for all where some people who didn’t understand the value of property sold their flats or houses for next to nothing, but people soon adopted the prevailing notion that real estate is an investment, and prices shot through the roof. Now, Polish people don’t actually make that much money, so no one could afford to pay rent to live in any of these places at comparable rates, so the only sales that occurred were to delusional foreigners or through odd bartering systems between Polish people who were trading equally overpriced property.

It looks like over the past few years, though, prices have started coming back down. People who actually want to sell their property can no longer rely on foreigners coming in flush with cash after the worldwide recession. Owners who want to sell brought their sale prices in line with the rental markets and got competitive. It still isn’t there yet; I expect a lot of the older generation will have to die and leave the properties to children who less remember communism and have less ties to the idea of owning the property. For now, my wife and I intend to be renters, but we’ll keep an eye out for any bargains out there.

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