Poland has an estimated housing deficit of around 1.5 million units. Demand in most of Poland’s largest cities has clearly exceeded supply since 2004. The availability of mortgages has increased both because of exceptionally low interest rates and the liberalisation of credit scoring at most banks. As a consequence of these factors house prices have risen more than two-fold over 2004 – 2006 and in the middle of 2007 they reached a level where buyers with average and less than average incomes struggled to afford a home.
Warsaw
Warsaw is the administrative and financial capital of Poland and the capital of the Mazowieckie Voivodeship. The city area within its administrative limits covers 517 sqkm, which - according to official statistics - is populated by approx. 1,700,000 inhabitants, whereas the whole metropolitan area’s population exceeds 2,700,000.
In common with many European cities, Warsaw was founded at the crossing of important roads and at a ford across Poland’s largest river. Warsaw definitely has the demographic make-up to favour significant housing demand. Eah year sees a fresh wave of professionals as the baby boom generation comes of age. The number of Varsovities aged 20-35 totals nearly 29,000. Also immigrants to Warsaw in pursuit of higher education or good jobs add to the pool of prospective apartment buyers.
The local labour market is still very good as evidenced by the relatively low unemployment rate (3.1% as of the end of November 2007).
As a consequence of reduced availability of new labour salaries are rising at very high rates - up to 9% yearly (November 2006/November 2007), while the same increase from November 2005 to November 2006 amounted to 3%. Yet this increase notwithstanding the price-to-income ratio has changed greatly to buyers’ disadvantage in the last four years as a result of soaring property prices. Now in Warsaw the average salary can buy circa 0.44 sqm of the average priced apartment.
Krakow
Krakow's demographics are ideally suited to stimulate demand for residential property. Although the population within the city limits remains stable, it has been growing at an increasing rate in the broader metropolitan area.
There are around 13,500 adults in the 20-35 year age group. These young adults, having established their households, find that the average annual supply of new developer apartments is actually below 5,000 units.
Like in other cities, Krakow’s existing housing stock does not suffice to cover the dwelling needs of its population.
Krakow is one of those cities in Polnd where the pre-WWII housing stock has been, to a large extent, retained. Nearly 1/3 of the apartments were built over 60 years ago, and they often fail to meet contemporary living standards and as such require sizeable capital expenditure for upgrading.
Moreover Krakow’s economic situation is relatively positive for its inhabitants – the GDP per capita is more than 50% higher than the national average. Incomes have grown gradually although they still remain much lower than in Warsaw, and the unemployment rate is among the lowest in Poland. Yet apartment prices in Krakow have been growing at a higher rate than the average remuneration. In Q4 2007 the average salary could buy mere 0.38 sqm of the average priced apartment, while in 2003 this same measure registered 0.78 sqm .
The value of Krakow's property market exceeded 2.5 billion PLN in 2007, a level many times higher than in the years prior. According to estimates, in 2008 the market will reach its record value of 3.3 billion PLN. This will result from a predicted rapid increase in the housing construction output and from recently unprecedented rises in apartment prices.
Łódź
Population-wise Łódź is Poland’s second largest city; it is also a voivodeship capital and an industrial and commercial centre of national significance. Łódź is located right at the heart of Poland – at the crossing of main transit routes from Europe’s west to east and from south to north. As such, it is ideally positioned to benefit in the coming years and will see new major motorway and rail routes intersecting right in its centre.
It covers an area of 294.4 sqkm and its population totals 760,300.
Łódź and its inhabitants enjoy economic benefits far below those of other big cities. High unemployment combined with its proximity to Warsaw results in significant emigration to the capital city.
In Łódź people earn less than in other big conurbations and, as a consequence, they enjoy reduced purchasing power. Unemployment is also rather high there. The low levels of remuneration in the city, however, also mean the area offers low labour costs and hence the city is highly attractive for industrial investors.
Until 2006 the total value of the property market in Łódź had not exceeded 150 million PLN yearly. 2007, however, saw a definite increase in the residential market value up to over 630 million PLN.
Poznań
Poznań is one of Poland’s oldest and largest cities, the historical capital of the Wielkopolska region, the Polish statehood cradle. Today it accommodates 667,000 people. Its economic standing is second only to that of Warsaw among Poland’s major residential markets. It is located half-way between Warsaw and Berlin, and for decades it has been the most important Polish trade fair centre. Poznań is also Poland’s second largest banking centre, after Warsaw.
Of great importance to development of the city’s urban infrastructure may be its hosting of the EURO 2012 football championship games.
And yet for many years the volume of the multi-family residential market in Poznań has remained relatively modest, and the apartment prices relatively stable.
The population is ageing, resulting from the prevalence of the first post-WWII population boom, now in their sixties. At the same time, however, the second post-WWII population boom is just entering maturity. This means that in the near future an intensive demand pressure could be expected from young people and families looking for their first homes.
The quality of the available housing stock is low. Nearly 50% of the city’s apartments were erected before WWII, and apartments built in 1971-1988 account for nearly 40% of the stock. A mere 12% of it was built in 1989-2002.
The stable local labour market is the key driver for residential housing demand. Among Polish big cities Poznań has the second lowest unemployment rate (3.9% as of the end of June 2007).
The Tri-City
The Tri-City district contains three cities – Gdansk, Gdynia and Sopot - and is populated by circa 750,000 and spreads over 415 sqkm area. As regards their demographics and economics, the three cities that make up the Tri- City are quite diversified. In terms of government and administration each of these is a separate entity that implements its own individual land use policy, and establishes and operates its own agencies, including those in charge of liaising with investors developing housing projects. In terms of area covered with local land use plans Gdansk is among the leaders, while in Gdynia the coverage is relatively low.
The Tri-City market’s value has grown consistently. In 2007 it reached 2 billion PLN for the first time, nearly twice as much as a year previously. According to preliminary estimates the growth will continue also in 2008.
Wrocław
Wrocław is situated in one of Europe’s most important transportation corridors, a route that links Dresden and Berlin with Krakow and The Ukraine. Wrocław is Poland’s fourth most populous city with 635,000 inhabitants.
The Odra and Oława rivers that flow through the city pose a recurring flood threat that affects investors’ and buyers’ attitudes alike. The numerous branches in the rivers also make it tough to solve the city’s transportation problems. Numerous road projects are now underway and several more are planned that are meant to contribute, at least in part, to solving these issues.
Wrocław is, however, a city attractive to investors and in the years 1998-2005 the value of direct foreign investment had reached circa 4 billion USD. The city has done especially well to attract investors from the high technology sector.
In terms of many economic indicators (such as GDP per capita, unemployment rate, or salaries) Wroclaw now ranks fourth or fifth among Poland’s biggest cities. Yet the city’s advantageous location and transportation accessibility, as well as exceptionally efficient local administration, favour its further economic development.