Polish Property: Should You Trust The "Expert" Predictions? by:Tim Hill

When considering whether or not to buy a property in Poland

as an investment it seems prudent to look for expert advice.

Is now a good time to buy? Which area is the best to choose?

Will the real estate rise in value? But by looking at the

historical track record of experts in the UK perhaps seeking

guidance from those who should know is not such a good idea.

PriceWaterhouse Coopers are one of the world's most

respected consultants and accountants. They employ thousands

of analysts to support their customer fronting staff in

decision making roles and many of these work in the area of

property. In 2004 they claimed UK house prices were "20-40%

above their long run averages" and predicted values would

fall by 10-15%. In reality they rose 3% in 2005, 9% in 2006

and they are still rising now.

Ernst&Young faired no better. They thought house prices

would rise 7% in 2004 before slowing to zero or even

declining in the following years.

The Centre of Economics and Business Research is an

independent business that, according to their website

carries out "thorough and insightful research". In 2003 they

claimed UK house prices would rise 15% in 2004 and 3.4% in

2005 before falling 1.5% in 2006 and 2.3% in 2007. They

pointed out that the average home would be worth less in

2007 than it was being sold for in 2003. In reality they

rose 14%, 3%, 9% and 7%. The average buyer, purchasing the

average house, would be 20,000 worse off today had they

followed the expert's advice.

Capital Economics is a similar organisation but on their

website they state that they offer "original and insightful

research" and point out specifically their work in the

property sector. One of their scenarios was picked up by the

Daily Mail newspaper in 2002 where they forecast a 12% rise

in 2003 before falls of 5% in 2004, 10% in 2005 and 7% in

2006. Buyers following this advice would have been even

worse off than those who listened to the Centre of Economics

and Business Research.

The Halifax is one of Britain's largest mortgage lenders

with a 23% market share. Buyers would hope they would be

more accurate as the future of house prices affects their

core business. But in January 2004 they predicted values

would rise 8% in the following twelve months. By July they

had changed their prediction to 16%, fundamentally admitting

they were 100% wrong.

These are the experts but many of the names may be

unfamiliar to buyers because they have only come into

contact with them via newspapers and the media who lead with

headlines such as "House prices to fall by 30%" or "Bank

chief warns of property price crash".

Even worse, and even more confusing, is that the same media

can seem to contradict itself. On 1st March 2005 the BBC

headline was "House Prices Show Slight Increase". Three days

later another headline said "House Prices Slip in February".

By the end of the month they released an article titled

"House Prices Dip Worst in a Decade" but by 5th April the

headline was "House Prices Stage Rise in March".

So if those who spend so much time and effort in Great

Britain cannot get it right what can be said about those who

write about the Polish market? Well unfortunately they are

going down the same road as their British counterparts.

Rednet is one of the largest real estate brokers in Poland.

In their market report for 2008 they made statements such as

"Katowice is reaching its maximum level" and "Lodz is above

the purchasing power of its inhabitants" while at the same

time admitting they could not explain why prices in Wilanow,

an upmarket suburb of Warsaw with large numbers of new

apartments coming onto the market, had seen price rises of

30%.

Conversely Ober-Haus, another chain of estate agents,

believes that there are not enough residential units coming

onto the market in any of the major cities and that prices

will continue to rise.

With the two leading experts contradicting each other the

situation is every bit as confusing as in Britain.

Some buyers try to carry out their own research but if big

companies with so much resource and computer power can't get

it right, what are the chances that you, with a spreadsheet,

will do any better?

While it might be easy to deduce that some of these

"experts" are keener to chase sensational "bad news-good

news" headlines rather than give us the facts, the

underlying truth is that many analysts turn to average

salaries and changes in interest rates to guess how the

market will develop and both these tests have already been

shown to have little correlation with house prices.

If all that leaves you a little depressed about what to do

and where to look consider a comment from Michael Jones,

Managing Director of The Right Move Abroad, "It is important

to look at the country as a whole, and not just the property

market. What state is the local economy in? Is there room

for further growth? Find the answers to these questions."

The richer a country gets, the more house prices will rise.

To this end Poland looks very promising:

* Residential mortgage loans make up less than 10% of the

country's GDP compared to a 48% average in the EU

* GDP per capita is still less than half that of its

German neighbour but the gap is reducing rapidly

* Pole's bring back between 21 and 55 billion Euros each

year from working abroad, most of which they spend on

goods, services and property

* There are 2,000 km of motorway to be build between 2007

and 2013 improving the infrastructure for further growth

in freight and logistics

* Eight brand new international airports are either under

construction or planned which will open up the country

to even more tourists

* Over 70 billion Euros is to be spent updating the

country's

infrastructure over the next five years which will attract

increased commercial and industrial investment

* Poland has the most acute housing shortage in all of

Europe with 308 dwellings per thousand inhabitants

(compared to 425 in the UK and 471 in Bulgaria)

* Poland is consistently in the top twenty countries

for Global Foreign Direct Investment confidence

* Polish exports doubled between 2000 and 2005 and

are now rising even faster since it joined the EU

* Poland is now the seventh most popular tourist destination

in Europe, attracting more visitors every year than Greece

* And so the list goes on

In the end there are two quotes that have stood the test of

time. Michael Ball of Reading University who said, "House

prices are like the weather, everyone has an opinion" and

Phil Spencer of Garsingtons Property Finders in London who

said. "Statistics can only tell you so much about buying a

house". Perhaps these are the real experts?

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For solid, reliable and unbiased advice on buying property in Poland get Tim Hill's essential printed guide at ==> http://www.bookshaker.com/product_info.php?products_id=195

About the author

Tim Hill is http://Mamdom.com's Operations Director managing a team of consultants who help foreign buyers identify and purchase suitable Poland property opportunities for investment, development and relocation. As well as speaking regularly at seminars on the Polish real estate market his comments are often quoted in the domestic and international press. Tim is married and currently lives with his wife, Agnieszka, in the Polish city of Lublin.

http://www.articlecity.com/articles/business_and_finance/article_9606.shtml

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