Poland is slowly experiencing a rise in apartment prices; however, it is still far behind the prices of premises in other European metropoleis. In such countries as, e.g., Ireland, Sweden, Estonia, Norway, Austria and Hungary, low interest rates of loans led to even 50% increases in real property prices.
Cheap Polish Market
Monaco is on the top position with respect to prices. Over PLN 251,000 is to be paid per square metre of real property in the centre of Monaco; the prices on the outskirts reach PLN 166,000. This means that for the average price of one metre of Monaco property, it is possible to buy a modest bed-sitter in Warsaw. The cause of such state of affairs may be the fact that Monaco is a tax haven that attracts the wealthiest people in the world - thus the staggering prices of apartments. The “Property Index. Overview of European Residential Markets” report published in 2017 analysed the size of apartments that can be purchased for EUR 200,000 in European countries. According to the calculations of Deloitte, in Poland, such budget is sufficient to purchase a property that is four times larger than in the United Kingdom.
Prices of apartments in the British Isles are one of the highest in Europe; for EUR 200,000 one can buy approx. 39 square metres in a smaller town, whereas in London, such money would only suffice to buy 11 square metres. In France, EUR 200,000 would buy, on average, 50 square metres, whereas in Paris only 19 square metres in older buildings. Real property in Ireland is also a significant expense; the above-mentioned amount would suffice to purchase an apartment of approx. 47 square metres in Dublin.
Austria is cheaper with respect to apartments in smaller cities, e.g. Graz or Linz, whereas in Vienna, EUR 200,000 would buy 55 square metres. In Brussels, one could afford 69 square metres, in Berlin - 63 square metres, in Munich - 33 square metres, in Amsterdam - 55 square metres, in Prague - 93 square metres, in Barcelona - 56 square metres, in Madrid - 68 square metres and in Lisbon - 107 square metres. How many square metres could be purchased in Poland for the amount of EUR 200,000? In Warsaw, such money would buy an apartment of up to 114 square metres. In Kraków, one could become an owner of a larger apartment, even of 140 square metres. Hungarian market is cheaper than the Polish real property market; EUR 200,000 would suffice to buy 162 square metres in Hungary.
Prices of apartments grew in the majority of European countries between 2010 and 2017; only Italy, Greece and Cyprus have more or less the same prices. The flourishing of the housing market in Poland has lasted for almost 6 years, but the prices started to grow noticeably in 2017. Data of the National Bank of Poland from the end of 2017 show that it was necessary to pay 7% more than in 2016 per square metre of an apartment. This is a definite effect of the growing demand for apartments, which has not yet been levelled by the supply. Developers rapidly erect new buildings in almost wholesale numbers; however, it is necessary to bear in mind that such situation may lead to the growing of the price bubble on the real property market. Furthermore, it may be assumed that further growth of prices may be supported by low costs of mortgage loans and boom on the labour market.
Construction Work Becomes More Costly
Increases in apartment prices are caused by galloping costs of construction work, materials and land. This is the effect of the special purpose act on which the government is working and which is going to release new areas for construction and introduce a simpler procedure for procuring administrative approvals. The consequence of governmental work may be a decrease in costs that developers have to sustain. It is also necessary to emphasise that the bull market may change on account of fluctuations in domestic and international economy or tightening of money policy pursued by the Polish Monetary Policy Council (which is, however, of little probability).