Does the average Pole rent or own their apartment? How has the market been so far, and how is the situation changing now? How much does it cost and which solution is better? Is it worth investing in property in Poland?
Poland is a great destination to come and live: not only here and now, but also for the longer term. It’s a good place to work, settle, run your business, and even invest. If you plan to stay here for a long time, a good place to live is surely your biggest concern. But… which is better? To rent or to buy? Is buying a good idea only for the long term? Is it worth investing in property in Poland? Spoiler alert: we’ll say it is!
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1. Market numbers. Poland vs. Europe
More than 66% of adult Poles own an apartment or a house. Of those, more than 80% live in the owned property. The EU average is 70%. In France, 36% of the population lives in a rented apartment. In Switzerland and Austria, it’s more than 40%. In Germany, almost half the population rents an apartment. We are far from the figures of Western Europe.
Poles still prefer to own. 9 out of every 10 people prefer to buy their own home rather than rent. Only then do they feel “on their own,” and owning an apartment is equated with security and settling down.
This trend is also driven by an unfortunate market situation, that is there’s a shortage of good rental units, and the rental procedures and standards are still forming. Until a few years ago, almost all rental units were rented out by private individuals, and as a result, there weren’t good standards or good rental practices. They were such typical “granny-style apartments”.
How is the situation now? Is something changing? Yes, finally!
There’s a growing awareness among tenants who have higher expectations for their apartments. New generations and so-called digital nomads require a whole new rental experience. And as a result, the range and standard of housing are constantly improving. Poland is slowly undergoing a housing transition that is also reflected in new residential investment data.
2. The New Housing Market in Poland
Without any doubt, 2021 was a record-breaking year. It had the highest number of housing units delivered to the market since the late 1970s. Poland ranked 2nd in Europe, right after France, in terms of the highest number of housing units completed in 2021 – 6.16 apartments per every 1,000 residents.
The fastest-growing cities in Poland are Warszawa – the capital, the Tri-City area (Gdańsk, Gdynia, Sopot), Kraków, and Wrocław. And the largest apartments are built in… Katowice. The average residential unit in our city is 54,9 m2, while the country average is 52,6 m2.
The year 2021 was also record-breaking in terms of sales. Many apartments were sold before the construction process even started. And – according to the data – 11% of all units sold were bought to be rented as investments.
Unfortunately, in 2022 the market has slowed down. Why? Because of inflation and interest rates rising, mortgages have become out of reach for most Poles and we can no longer afford to buy our dream apartment.
What does it mean for potential investors? Two things mainly. First: people with more funds to invest have a better choice now, and apartment sellers are eager to negotiate. Developers are keen to sell apartments they have already built. Second: Those who cannot afford to buy an apartment (or prefer not to buy one) search for a place to rent. So there’s a growing demand for rental units. And good quality rental units…
3. Property Prices in Poland vs. Europe
According to the Property Index 2022 report conducted by Deliotte, the most expensive apartments in Europe are in the UK: 1 m2 costs 4905 euros.
Countries with the highest average prices also are Austria (EUR 4782/m2), France (EUR 4639/m2), Germany (EUR 4600/m2), and the Netherlands (EUR 3949/m2). In Poland, the average price for 1 m2 in 2021 was 1729 euros. That value was 9% higher than in 2020.
How is the situation in certain cities? In December 2022 the average price for 1 m2 was:
- 13 321 zł / 2805 EUR in Warszawa — the most expensive Polish city;
- 12 307 zł / 2590 EUR in Kraków, the second most expensive and definitely the most touristic Polish city;
- third place was Wrocław with an average price of 11 981 zł / 2522 euro.
How about Katowice? The value in December 2022 was 10 416 zł (the first time in history the value has exceeded 10 000 zł). Depending on the city, average prices increased up to 17% year over year (December 2021 to 2022).
The previous years were really crazy, so many people decided not to buy. Result? Many high-standard, new apartments are waiting for potential buyers. We see many interesting offers on our property market in Katowice.
Even though the average prices have risen, it’s still a good time to invest, especially in cities with expanding business possibilities where interest is growing, like Katowice.
4. Mortgage Availability in Poland
To better understand the situation of the typical Pole, it’s necessary to look at how much it costs them to buy an apartment. The aforementioned “Property Index” report talks about this.
In Poland, it takes an average of 7.8 times your gross annual salary to buy a 70-square-meter apartment. In easier words: an average Pole would have to save every single zloty for 8 years to buy an apartment. For most Poles, such funds are impossible to save, so they buy an apartment with a mortgage, usually for 25 years.
However, due to the increase in interest rates (rising at the fastest rate in Europe), people cannot afford mortgages anymore. Almost half as many loans were granted in 2022 as in 2021. Those Poles who cannot afford a mortgage are choosing to rent.
5. Mortgage vs. Rental: Cost Comparison
Faced with the choice of buying or renting, you certainly need to consider monthly costs. Our Wellcome Home property team has prepared a simulation. We compared the monthly costs of renting an apartment to buying one with a mortgage.
For the purpose of this calculation, we have assumed that the apartment is new (straight from the developer), has 50+ m2 (2-bedroom, 1 bathroom), and is located in Katowice city center – this is the market we know best. What’s the difference?
- The cost of the flat at the average price is 520k zlotys.
- Condition: you must have a 20% down payment, which is 104 thousand zlotys.
- For the rest you take a loan for 25 years (the most typical loan term), and the payment is unchanged for the first 60 months.
The monthly payment in such a case at current rates is about 3150 zł. On top of that, there are insurance costs – around 150 zł monthly. Let’s assume the monthly cost is 3300 zł + administrative fees, around 500 zł. It’s 3800 zł in total.
Remember you’ll need extra funds to finish and equip the apartments: this may even cost 2200 to 2500 zł / m2 (it’ll increase your mortgage cost).
For a 50 m2 apartment in Katowice, the average monthly rent will be around 2500 zł + administrative fees also around 500 zł. It’s almost 1000 zł less than a mortgage. And remember, such an apartment will already be furnished and ready to move in straight away. We don’t take into account the utilities’ usage: they’ll be the same, no matter if you buy or rent.
Remember that this value is true for Katowice. Bigger Polish cities will be more expensive. Warszawa is the most expensive city in Central Europe in terms of rentals. The average price there is around 17.86 euro / 1 m2. So the rent for a 50 m2 flat would be around 4400 zł. Equally, the mortgage would be more expensive.
For comparison: Prague rent is EUR 11.25 and Bratislava EUR 11.55/m2. The most expensive city in Europe in terms of renting remains Paris, with average rates of EUR 29.1/m2. Second place is Olso, 3rd is London.
6. Is Renting A Long-Term Trend in Poland?
In the short term, renting is becoming more popular due to the economic situation: people cannot afford to buy property, and some prefer to wait. They’re afraid of an expensive mortgage, so they prefer to rent and see how the situation changes.
But let’s see it also in the longer term: society changes and their needs too.
More and more people in Poland tend to rent a flat because:
- they can afford a higher standard and better location for the same money;
- they have other plans for the future. A family and a house on the outskirts are no more a dream of every young person;
- it’s easier to change plans, be elastic, and move to any other place in the world;
- specialists tend to change their jobs more often. They relocate to another city or even country. They know they don’t have to stay in one place for all their life.
Also, younger generations prefer subscription services rather than buying. We don’t have to earn more to have access to office space, cars, and bikes. We stream music and movies and even subscribe to food delivery. A fair, good standard of housing is another thing we want to have on demand.
7. Is Buying a Property in Poland a Good Idea?
Yes, if you can afford it. You have funds to invest and you think for the long term. Watching the market for the past decade, we’ve seen that, despite the temporal circumstances, real estate has been gaining in value over time – it’s steady growth. That’s why investing in it also makes sense for the long term – even if you don’t plan to live in such an apartment yourself, you can always rent it out.
Looking at the trends, more and more people will choose to rent consciously, especially from professional rental operators that will take care of them and the rental experience. You, as an investor, can earn double – through a stable increase in the value of the property and a return on investment through monthly rental income.
Poland also seems like the right place: it is a country of strategic geopolitical importance, with a growing economy, and record results when it comes to investment. And not just residential. 2021 was record-breaking in terms of foreign investment.
To rent or to buy? The decision is always tough and it depends on many factors and personal preferences.
Certainly, renting is gaining a lot of interest in Poland: now, because Poles can’t afford to buy, and in the future: because needs are changing, and people also change the way they live.
This is a great sign both: for people who plan to make a longer stop in Poland and rent comfortably – because there will be more and more such apartments, and for investors who can afford to buy and bet on a safe investment of capital.
Are you interested in this topic? Do you consider investing in Poland? Let us know! Whatever you’re planning, we can support you in that.