Poland Property Market Still Has Strong Domestic Demand
Poland is Europe's sixth largest economy and is still benefiting from strong demand. Because it has yet to join the Euro, it has been able to devalue the local currency in order to maintain competitiveness. Last year the Polish economy grew by 3.8%, it is predicted to grow by 2.5% this year and by 2.5% in 2013 according to the OECD.
Although local consumption is expected to slow, it is also expected that exports will help compensate for this week demand, reducing the budget deficit from its current 5.3%. Houses in Warsaw have lost 13.63% of the value since the economic crisis began, while in Kraków prices are down by 17.87% and by 25.22% in Tri-City.
The number of new, unsold homes rose by 11% last year, even though the number of homes completed fell by 3%. The market also saw an increase of distressed sales and housing inventory levels have risen considerably.
Poland has benefited from nearly two decades of 5% annual growth, and since it joined the European Union in April 2004 there has been an enormous housing boom.
Prices in Warsaw increased by 23% in 2005, by 28% in 2006, by 45% in 2007 and by 13% in 2008, and some cities saw even larger price rises. EU membership encouraged foreigners to buy property in the country, even though they are limited to only one home each, and it also encouraged Poles working abroad to send money home.
Although the Polish property market is now seeing a price correction, it may be largely protected due to the fact that its economy is still growing and unlike most of Europe is less likely to suffer from a double dip recession.