Up here, down there

The number of apartments available from developers and housing associations for sale or rent in March was 84 percent higher than in March 2007, according to the Central Statistical Office. Experts argued that this led to the fall in property prices last month.

According to a report published last week by Open Finance and Oferty.Net, the increasing number of new apartments will drive prices down further. But in Warsaw, where the average price drop was just 1.8 percent - down to zł.8,662 per sqm - bargain hunters are unlikely to find what they're looking for.

"In general, the price drop in Warsaw was not really significant for this market," said Katarzyna Pawlak, a valuation and market research specialist at Polish Properties. "Right now in Warsaw, housing prices are becoming increasingly linked to location. Previously, prices were rising regardless of the location. Such segmentation of the market will heal the unhealthy price surge," she told WBJ.

Prices in the city center are still rising as land remains in limited supply. Much of the land which is being acquired has been designated for exclusive apartment-building projects, for which demand is still high. According to Pawlak, the rising prices in the city center, coupled with falling prices in less attractive locations will ensure that the average price in Warsaw remains stable.

Fears of a fall in house prices will decrease demand further, according to various experts. "Most people are waiting for house prices to fall before buying, which means the price drop could be a self-fulfilling prophecy. In this case, however, the price correction will be small, because prices will immediately rise when those people who are now waiting finally make their purchases," explained Pawlak.