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Polish rent rises – Independent data confirms rentals are surging

In markets experiencing ultra rapid property price growth, rentals are always going to be flat. The fact of life is that it is all but impossible to plug into very rapid price growth AND high rentals.

For this reason, it is almost always necessary to cashflow the early years of a property investment in CEE markets.

Once the price growth starts to slow from the heady initial pace, we enter a second period of growth – the plateau period - of slower capital growth and higher rents.

This is because, as an increasing number of people need to wait longer in order to afford to buy, so demand switches from buying to renting – this increased demand pushes pushing up prices in the rental sector.

That, at least, is the logical theory.

But nothing can beat hard evidence – evidence that we can now see.

Of course, the next phase is the pattern we have seen develop in Prague, and that is a plateau period of strong rents and slower growth followed by a second wave of strong capital growth – not as strong as the first wave, but still exceptional.

Meanwhile, investors are able to take advantage of a newly vibrant rental market, as is the case in Poland.

The independent data comes from the property portal Szybko - one of the biggest property portals in Poland. Szybko’s big advantage is the fact that it advertises rental properties on both the primary and secondary markets.

What is interesting about the data is the consistency across the great majority of the Polish market.

Not only are rentals rising, voids are falling.

The time taken to rent out an apartment in Wrocław, for example has decreased from 24 days in 2006 to 19 days now.

A similar situation can be found in other main Polish cities such as Warsaw and Kraków.

According to the portal’s database, rents in Wrocław rose especially rapidly between September and October 2007. Rental rates for studios were close to Warsaw’s level. The demand is huge as it comes not only from students, but also from migrants finding employment in the city.

The problem with the rental market in Poland is that there is no way to estimate the real size of the market as many landlords (to avoid paying taxes) operate on the black market.

According to research conducted by TNS AISA for GE Money Bank, 70% of Polish people age 18-29 still live with their parents. In Czech Republic, Hungary, Romania or Russia the percentage is much lower.

For example 62% of surveyed Romanians declared that they own house. So, it is highly likely that the Polish pattern will follow that elsewhere going forward, creating increased rental demand.

Property Secrets analyst Anna Grybel said: “We are seeing a pattern develop in Poland exactly as we predicted.

‘We should expect strong increases in rent levels in Warsaw, Wrocław and Kraków as these cities have already entered a new phase of development and the sale market is cooling off.

‘Prices increase here will be only 5-10% in 2007. Strong inflow of migrants and significant students’ communities in those cities combined with lack of supply of quality rental apartments will continue to push up rents.

‘This especially applies to Wrocław, where anecdotal evidence is that supply significantly outstrips demand.

‘In Gdańsk, Poznań and Katowice, property prices have been increasing faster at 20-50% in 2007 – a sign that the markets are still in the first phase of rapid growth.

‘However, Gdańsk and Poznań are slowing down on a monthly basis – a sign they are coming to the end of their initial rapid price growth phase.

‘Katowice still has a lot of potential for future price increases – the city was the last Polish city to take off and that’s why here the residents’ purchasing power is still significantly higher than in other Polish cities - the average price hasn’t exceeded PLN6,000/sqm, while wages are the second highest after Warsaw.

‘In those cities it will take longer to see rents increasing significantly.’

Click on tables below to see details....

POSTED BY ROBIN BOWMAN ON MON 3RD DECEMBER AT 19:30 GMT

TAGS: Wroclaw Property, Warsaw Property, Rental, Poznan Property, Poland Property, Katowice Property, Letting, Gdansk Property

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POLISH RENT RISES – INDEPENDENT DATA CONFIRMS RENTALS ARE SURGING

Romania and Poland - statistics and lies... 'According to research conducted by TNS AISA for GE Money Bank, 70% of Polish people age 18-29 still live with their parents. In Czech Republic, Hungary, Romania or Russia the percentage is much lower. For example 62% of surveyed Romanians declared that they own house. So, it is highly likely that the Polish pattern will follow that elsewhere going forward, creating increased rental demand.' This statement might be 'according to' but is it worth quoting? Assuming we are talking about the same age group (I dont have time to source the original report) do you REALLY belive that 62% of Romanians own their own houses? Maybe 2% is nearer the figure but that is only a guess. But of course it depends on who responded to the survey..and who was asked to participate. I am a great supporter of PS's style of analysis and I believe it to be the best. However it could clearly be better if such 'according to' statements were backed up by supplementary evidence and the reality.

POSTED BY CHARLES BELL ON SAT 8TH DECEMBER AT 02:00

OWNERS

Charles, I don't understand. Are you suggesting that 98% of Romanians are renting? My understanding was that in Romania (as with other CEE countries) the majority of people are owner occupiers, having been given their apartments with the end of communism. This is a big part of PS's 'affordability' argument - that locals can afford to buy swanky new builds because they already have so much equity in their existing properties.

POSTED BY ANDREW ON SAT 8TH DECEMBER AT 12:32

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