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Polish Real Estate Market Changes With Financial Markets
Classified Polnews
Warsaw, Poland - February 24, 2009 Both the weakening of the Polish zloty against the Euro and more restrictive bank lending policies are influencing the Polish real estate market. The net effect is a drop in sales that is rippling through Poland's economy.
Banks now require a thirty to forty percent equity before they will approve a mortgage. One estimate is that this has eliminated as much a 60 percent of those who would have been potential buyers under the previous loose lending practices.
With fewer buyers, projects under construction are being abandoned and completed flats are not selling. So a large number of developers have been filing for bankruptcy. And some projects in the planning stages have been refused financing.
Real estate prices are down ten to twenty percent.
Those contractors that have not filed for bankruptcy are entering low bids on government projects just to keep busy. This has been quite advantageous to local Polish governments since the bids tendered by these contractors are often well below what the governments had planned in their financial forecasts.
Banks, no longer needing as many branch offices to service loan customers, are cutting costs by laying off workers and closing offices. As they close, Warsaw that has developed a reputation for being a city of banks and coffee shops, is moving toward being a city of coffee shops.
Those who have been finishing the interiors of flats that they had purchased have found that they can no longer afford to move along as fast as they had expected as the price of materials rises to reflect the now higher cost of the Euro.
The cost of the Euro is also affecting Western Europeans who invested heavily in Polish real estate. Their rents, generally paid to them in Zloty, are significantly lower after conversion to Euro.
On the flip side, purchasing Polish real estate with Euro is now a bargain compared to what it was. But there is no reported increase in foreign buyers.
The Polish government is reported to be considering buying some of the distressed housing projects and turning them into social housing.
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