thanks, for the article neil, very encouraging. does it herald further PS poland deals?

one point: you write that "This slow down in price growth was expected, of course..." referring to the fact that sales have fallen 70% since last summer, and prices have stagnated.

yet reviewing the PS sales material from last summer, it didn't seem that the slowdown was foreseen at all. raucous price growth over the next 12-18 months was predicted. i'd be interested to know if you have changed your forecasting methods since then, and if so in what way?

i know it's not easy to foretell the future, but there must be signs on both the supply and demand sides that a market is about to seize up. PS would have a nice competitive advantage, and still more of our money, if they could learn to read these.

regards,
dan

I was in Warsaw this Monday and Tuesday and checked out Westland Court.

The build quality was excellent and as someone who works in construction it compared very well against the quality you find in UK residential schemes (possibly better).

I met with Rednet who said that sale prices were down around 5-8% since the peak last year but the rental market was excellent with nearly all available units at the development let.

I would like to see PS offering more Poland deals. From my personal point of view I think it is too late to deal in Czech properties with yields so low and possibly the same with Slovakia.

Neil - Are PS going to be offering any more Poland deals within the next 6 months?

I'm not sure I really understand this 'second wave' growth idea. The article says, and I quote

"The question any sensible property investors wants to know the answer to is:

'When will the second wave of strong growth begin?'"

This is made to sound like a rule, but I'm not quite sure I understand that this rule MUST always follow. I can see that the stats on Czech Republic show this has happened there (and I'm pleased to say that I've benefited from it). I'm not quite clear why, and why Poland will definitely follow this trend, and yet there is no talk of the Baltic states following this trend. In fact its gone into freefall there - so what's the difference?

This is how I understand it at present, and perhaps people could comment on this:

The current situation

Ultimately it all comes down to supply and demand. Demand rose quickly due to mortgage availability and a change in attitude/culture locally. Supply (as it often does) lags behind demand, causing price inflation (classic economics that!). Supply then increased as developers recognised this huge potential, but in the meantime demand fell due to increased prices.

This is where we find ourselves now. Significant supply and less demand - so prices have stagnated. Hopefully they will not fall, but with significant supply coming onto the market can we be sure it won't?

The future situation

So what changes this in the future?
(1) Is the rate of building slowing (reducing supply)? OR
(2) Demand will increase in the future (due to increasing wealth perhaps).

How long will it take for this to turn around? You say not in 2008, but surely its very hard to say when, and when it does, again surely its likely to be slow and steady in the future and we'll never reach the same levels of growth again.

Neil - would you mind clarifying this for me. I'd just like to be clear why its the "rule" you make it out to be.

Will the Baltic's have a similar wave? Also, hasn't Slovakia been more of a long steady increase, so surely there's no waves there.

I'd love a PS reply to my above post if that's possible.

Since I wrote this I notice that Slovakian property is on a very steep increase (one of the the fastest, in the world), while Latvia is on a very steep decreasing price curve - down 38%!

So what's happened in these markets:

(1) Slovakian economy has gone from strength to strength increasing demand. Relatively low levels of borrowing in the country mean that the credit crunch has had little impact. Supply is increasing but only at a steady rate - hence prices have increased (Very nice for those of us with properties there - although I have to say that mine are very large properties on which prices have not risen as much, as people can't afford them!).

(2) Latvia - very large current account deficit (i.e. importing too much) has weakened the economy. Also, property price growth was largely due to large mortgage borrowings and the credit credit crunch has hit them hard (significantly reducing demand). (I know nothing of the supply situation there - I assume from price falls that there's a lot of excess property there).

And what of Poland? My guess is that the answer to my own question is as follows:

The economy continues to remain strong. This will increase wealth, and also draw back Poles who had left. This will increase demand, slowly in the long term. I don't know much about building levels, but assume they've slowed somewhat (can anyone confirm this?), and hence why there will be a 'second wave'.

If anyone can provide more information on this I'd be grateful though.

A 'second wave' therefore seems to be dependent on a very strong economy, in markets where there is a longer term shortage of good quality housing stock. The end of the first phase comes after an initial increase in demand and later cooling off due to increased supply, while the second wave comes through longer term economic growth and more steady building.

I'm speculating here - Neil, where have I got this right and where wrong?