How do Poles’ investment opportunities compare to other European countries?

Housing market

Ten post dostępny jest także w języku: polski

Property prices are constantly going up and what contributed to this during the pandemic were the price increases of materials and finishing works. Although within 11 years the prices of flats in Poland have increased by approximately 33%, in many European countries the price jumps have been significantly higher, reaching as much as 126%.

An analysis of average earnings and prices per square metre of flats shows that in the case of purchasing a 60-square-metre flat in Poznań, a statistical inhabitant would have to set aside approximately 9 years’ salary. In the case of a resident of Warsaw, on the other hand, the purchase of a property of the same size would be equivalent to 12 annual salaries. Although Poland’s capital city has the highest average annual salary, it also has higher housing prices per square metre, which means that a statistical Varsovian can purchase 5.03 m2 for his/her annual salary.

A much better ratio of the average annual net salary to the average offer price of flats is observed in Poznań, where residents can afford to buy 6.53 m2, and in Łódź, where the investment opportunities amount to 6.36 m2 . The city which, similarly to Warsaw, oscillates around 5 m2 is Wrocław, where for a statistical annual salary one can buy 5.32 m2.

Housing prices in large cities

According to data from the tabelaofert.pl website, it can be concluded that in the recent quarters, an upward trend has appeared on the residential real estate market. At the end of June 2021, average residential prices in Warsaw amounted to PLN 12,184 per sqm, in Kraków – PLN 10,807 per sqm, and in Gdańsk – PLN 10,726 per sqm. Lower prices appeared in Poznań and Łódź, where they amounted to PLN 8,378/m2 and PLN 7,426/m2 respectively.

According to Maciej Dymkowski, managing director of tabelaofert.pl, real estate prices have been steadily increasing since the first quarter of 2013. Additionally, the jump in prices of primary market flats depended on the cost of materials and finishing works. The prices were also influenced by the high demand for flats and the introduction of higher-standard units to the market. The rising prices are also related to the growing cost of land for housing investments. High demand on the market is in turn a response of investors to low-interest rates on deposits, which make investors look for more profitable ventures.

Rising prices not only in Poland

It is worth noting that rising real estate prices on the housing market are a common issue in many European countries. According to Eurostat data, in the period between 2010 and the first quarter of this year, residential prices in the EU rose by around 33%. This level of price growth over 11 years was recorded, among others, in Poland. Bigger jumps in costs occurred, however, in Estonia, where they amounted to 126%, and in Latvia, where price increases reached 86%.

Annual salaries and housing prices

Average annual net earnings in Poland amount to approximately EUR 10,404. This result, according to Eurostat data for 2020, gives Poland 24th place when compared with other EU countries. This is the sixth position from the end and lower earnings appear among others in Bulgaria, where they amount to EUR 6,385, in Hungary – EUR 9,488 and in Slovakia – EUR 10,098. These amounts are definitely lower than in western countries, e.g. in Germany, where the average net annual salary is EUR 31,830.

However, high salaries do not mean a shorter time to prepare savings for the purchase of a flat. According to a Deloitte report from 2020, the statistical Berliner has to spend around 11.6 salaries to buy a 60-square-metre flat. The price per square metre is about 6200 euros. For the Czech Republic, the cost of a flat in Prague is about 3624 euros per square metre, and in Slovakia, the price per square metre in Bratislava reaches about 2805 euros. It follows that the Czechs would have to put aside their salary for 19 years and the Slovaks for 16.6.

According to Katarzyna Tworska, managing director of redNet 24, a company specialising in the sale of developer flats, flat prices in Warsaw are not as high as in other European capitals. As she adds, the perception of prices is influenced by many factors, with earnings being one of them. However, it should be remembered that the real estate market is also influenced by the availability and cost of credit as well as the number of newly built investments.

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