Housing stabilization

Inflation on the Polish housing market is expected to slow through 2010, and a drop like that which has taken place in the United States in unlikely, concluded a recent Reuters poll of 11 bank economists and property market experts.

According to the poll, the annual growth in housing prices will amount to five percent this year and three percent in both 2009 and 2010. This stands in stark contrast to the double-digit growth of recent years, when house price inflation was driven by factors which included Poland's accession to the EU and wide access to relatively cheap mortgages.

"The story of the 2004-2007 boom will not repeat itself," said Maciej Dymkowski of redNet Consulting. "The average Pole is no longer able to afford an apartment at current prices," he added.

As the experts pointed out, apartment prices in some locations could actually drop, especially in the case of the poor-quality prefabricated apartment blocks dating back to Poland's Communist era some of which are expected to face demolition within the next decade.

"Prices are most likely to fall in dwellings with low standards of decor, those made of large, prefabricated concrete slabs and those poorly located," said Wojciech Matysiak, an economist at Bank BGŻ.

According to the poll, however, a major real estate market crisis is not to be expected, since the robust economy and rising wages should help prevent a major drop. The mortgage market, which is still far from being saturated and offers high-quality products, is also likely, in experts' opinion, to weather the possible period of slower growth.

"Rising wages will enable Poles to keep making their mortgage payments," said Ernest Pytlarczyk, an economist at BRE Bank in Warsaw.