Despite sluggish demand, Poland’s housing price increase is slowing down.
According to the Polish central bank, Narodowy Bank Polski (NBP), the average price of existing apartments in Poland’s seven largest cities—Warsaw, Gdansk, Gdynia, Kraków, ód, Pozna, and Wroclaw—rose by 5.6% in 2020 to an average of PLN 8,325 (€1,819) per square meter (sq. m.—just about half the y-o The minor rise in price once inflation was considered was 2.78%.
House prices in the seven major cities decreased a little by 0.8% in Q4 2020 (-1.1% inflation-adjusted), every quarter.
In Poland’s major cities
The analysis of property valuation in the major cities is explained below:
Warsaw
The average price of existing homes in Warsaw increased by a meager 2.7% in 2020 (and decreased by 0.1% when adjusted for inflation), a significant reduction from the 6.2% increase in the previous year.
Łódź
Of Poland’s seven largest cities, Łódź experienced the highest increase in housing prices, with a y-o-y increase in prices of 13.4% (10.3% after accounting for inflation).
Kraków and Wroclaw
Kraków and Wroclaw came next, with price increases of 9.5% and 9%, respectively.
Gdansk
High price increases were also experienced in other significant Polish cities, notably Gdansk (7.1%) and Gdynia (6.1%).
Pozna
Pozna experienced the lowest price increase of 2.2% among the seven major cities in 2020, with prices declining by 0.5% after accounting for inflation.
Good yields in Warsaw and Krakow
Gross rental yields, or the gross return on investment in an apartment assuming it is fully rented out, are 6.0% for a 90 square meter (sq. m.) flat in the center of Warsaw. Renting such an apartment may run you about EUR 1,200 per month but buying one might run you about EUR 235,000. Although prices and rent are significantly greater, flats of 120 square meters provide comparable yields.
These yields are good. Such good yields may be found across Warsaw’s core districts, including Mokotów, ródmiecie, and other places. The typical yield in the city is 6%, and very small flats may offer much more (but we lack the studies to support this).
Surprisingly, Krakow can say the same. The cost of apartments in this region is often compared to that in Warsaw’s less populated areas. They receive monthly rents of approximately 11 to 12 euros per square meter. In Krakow, a 90-square-meter apartment will cost you about EUR 200,000 and rent for about EUR 1,100, giving you a yield of 6.5%.
Costs and Taxes
Poland has substantial income taxes.
Net rental income is subject to progressive taxes that can reach 32%.
Gains: A flat tax of 19% is applied to capital gains made on properties sold within five years after purchase. Property sales after a 5-year holding term result in capital gains that are not subject to capital gains tax.
Polish property gifts and inheritances are subject to progressive taxation.
Polish citizens are subject to progressive taxes on their international income which can reach 32%.
Purchase Guide
The cost of goods is cheap in Poland.
The cost of buying and selling a property, or the roundtrip transaction expenses, ranges from 5.35% to 8.10%, with the buyer bearing all costs. The standard real estate agent commission for apartments for rent is 3%.
Summary
According to NBP, Warsaw is Poland’s most costly property, with existing homes there costing an average of PLN 10,072 (€ 2,198) per sq.m n 2020. Housing costs on average PLN 8,874 (€1,936) per sq.m in Gdansk and PLN 8,118 (€1,771) per square meter in Kraków. Other significant cities are Wroclaw, where an sq.m costs PLN 7,973 (€ 1,740), and Gdynia, where a square meter costs PLN 7,906 (€ 1,725).
Łódź has the cheapest houses among the 7 main cities, at € 1,205 per sq. m.
