What a year it's been for both the Polish economy generally and the Polish property market in particular. Growth in the number of new build properties, prices and mortgage approvals all exceeded official forecasts. Unemployment, despite increasing marginally in the last quarter remains at an historic low of 5.1 % and salaries have increased on average by 6% in 2019.
So where do we go from here?
Firstly it should be said, forecasting is a mugs game in a world as interconnected as ours when a sneeze in China can impact the stock price of an engineering firm in Chicago.
Despite this, we can look at the progression of the Polish economy and suggest that all signs at the moment suggest a slight slowdown this year but a continuance of growth for the foreseeable future. We would be less positive of the level of economic growth this year than many experts (see TheFirstNews article on the Polish economy 2020 here) but only because of external international events.(U.S. Election, Brexit, Chinese slowdown, Climate costs etc.)
What about property?
In 2020, property prices will go up. There, we said it. Not a very bold statement considering all of the data but a statement all the same. How much it will go up will depend on a lot of factors but up it will go. It will not go up much more that the actual entrance and exit costs of a property transaction though. If you are considering investing in Polish Property this year, it should be considered a long term investment.
In the short term, developers are reporting a shortage of suitable available land for development in all major cities. This will obviously reduce supply and with demand expected to remain steady or increase, prices will have to reflect the scarcity.
Interest rates are at an historic low of 1.5% and despite jumps in inflation, most analysts do not expect the Central bank to begin raising rates anytime soon. A long term investor should include a rise of mortgage costs in their calculation but also consider an expected rise in rental income that would come hand in hand with inflation.
The Minimum Wage
The government recently announced a plan to double the minimum wage by 2024( see BigDoor24 article on it's effects here). It suggests the government has made a decision that Poland will not be a low cost economy in the future but will attempt to attract higher paying industries much like Ireland has done by attracting Facebook, Apple and more to locate and hire there. Any increase in salaries will likely translate to an increase in property prices.
Employment stands at an historically low 5.1%. An economist will tell you that anything below 5 % is essentially zero unemployment. This is not always a good thing as it can put a real strain on growth if there not enough workers available for new businesses. However, as the government has issued a record number of work permits, outstripping Germany, we would consider this a good problem.
Polish Mortgage Growth
Poland has a much lower level of mortgages than the EU average and the ratio of house prices to disposable income is again quite low by European standards (source Hypostat). This will change as mortgages become more accessible and attractive, resulting in higher prices in the longer term.
With a shortage of workers comes a demand for higher wages. Coupled with the minimum wage hike plan we expect this to continue. Long term shortages will not be good but as already mentioned, we are not there yet.
What to say. There are many reports of Polish nationals currently based in the UK making plans to return home as the Polish economy grows and the UK one ....shrinks? This will obviously increase demand but by how much it is hard to say.
So overall we remain confident that the future looks bright for Polish property investment. In terms of what to buy and where, The BigDoor24 Blog has lots of articles that may help. Please do plenty of research before buying and remember, the above represents our best opinions, not our promise.