The on-going Eurozone debt crisis in Poland is having a disastrous effect on the property market with prices plummeting since 2008.
House prices in Warsaw have fallen by 13.1% in that period but the biggest casualty has been the city of Lodz which saw its house prices plummet by 35.7%.
Poland is not alone in Europe for seeing dramatic property price falls but recent economic data show the situation could get a lot worse.
As one of the few countries to avoid dropping into recession during the global financial meltdown and the economy even grew fairly strongly between 2008 and 2011.
Now, the Eurozone crisis appears to have caught up with Poland with domestic demand and investment both in decline.
Last year, the economy grew by 1.5%, the lowest since 2002, and the government is predicting growth of 2.2% this year.
The Organisation for Economic Co-operation and Development disagrees and expects Poland’s GDP growth will hit around 1.6% again.
However, most analysts are pessimistic about the future of Poland’s economy and they are predicting growth of around 1% – and lower.
These predictions for poor growth have been reflected in the growing number of jobless, now running at 13.3% in December 2012, the highest it has been since 2006.
Growing numbers of companies are going bust and the unemployment figure is set to rise through 2013.
The gloomy economic predictions are not helping the property market which is also plagued by oversupply and rising interest rate rises.
However, the number of property sales in Poland increased slightly in 2012 to 152,527 units – a rise of 16.5% on the year previously.
Oversupply of homes
Marcin Plazinski, of Emmerson Real Estate, said: “Poland’s property market has not rebounded and prices may drop further yet because some developers who anticipated a recovery in 2010 and 2011 began developing and now there is an oversupply of housing.”
In addition, cash-strapped owners wanting to sell are adding to the problem and the market is described as being ‘awash with unsold units’.
Even those wanting to rent out property are feeling the pinch with a rental market described as being ‘thin’.
The market has shrunk over the last 20 years as the economy grew and many people opted to buy their own property, but the oversupply of homes for sale has also undermined rental prices.
When Poland joined the European Union in 2004 there followed a massive property boom with price increases of 23% recorded in 2005 and 28% in 2007.
However, for many people, especially the young who bought in the boom, the Polish property market shows little signs of recovery and many predict it will get worse during 2013.