It’s easier to buy an apartment in Madrid than in Warsaw

The European Observation Network on Territorial Development and Cohesion (ESPON) is preparing a report on real estate prices in the European Union. So far, the first conclusions have been published. High prices in Warsaw are not a surprise, although estimates of the average price per square meter vary depending on the source. SonarHoe, which deals with real estate valuation, assumes that in October 2024 the price of 1 square meter in Warsaw was PLN 16,316. The price has increased by PLN 1,263 since the beginning of the year, which is a change of 8.39%. RynekPierwotny.pl analysts assume that currently the average price of the metro already exceeds PLN 17.5 thousand. PLN per 1 sq m. Whatever it is, even a childless couple earning above average (in September it was PLN 8,141 gross) cannot afford to buy 1 sq m even after adding up their earnings – and this is even if it is impossible to meet the condition that they do not spend any money on any other purposes.

30 years of earning money for an apartment

To compare how many years it takes to earn money for an apartment, ESPON analysts took a 100-square-meter apartment as an example and assumed that savings for housing purposes should not exceed 40%. potential buyer’s income. With such reservations, Warsaw residents will have to collect for 20-35 years (and it is worth adding that the larger the apartment, the lower the price per square meter).

ESPON calculations show that housing is more available in the Benelux countries (15 to 25 years of saving), in Madrid (20-25 years), in Rome (15-20 years), in Dublin (10-15 years), in Oslo (20-25 years), Stockholm (10-15 years), Copenhagen (20-25 years), Helsinki (10-15 years), Tallinn (20-25 years). The situation is worse or as bad as in the capital of Poland in Vilnius, Budapest or Riga.

And how much easier is it to fulfill your housing aspirations in other Polish cities? In Łódź, saving for a 100-square-meter apartment will take 20-25 years, just as long as in Madrid, Oslo and Copenhagen. There is also the other side: in Krakow and Tricity, you have to save for an apartment, according to the methodology adopted by ESPON, for 30-35 years, so it is even more difficult.

Real estate prices in Warsaw

Let’s go back to SonarHome data. The most expensive district in Warsaw is, and there is no surprise here, Śródmieście. The price of 1 square meter here is PLN 21,842, which is PLN 5,526 higher than the average price in the city in general (33.8% more than the average for the entire Warsaw). The second most expensive district in Warsaw is Żoliborz, where the price of 1 square meter of apartment is PLN 19,031. In third place is the Wilanów district. The price per m² of an apartment here is PLN 18,454, which is PLN 2,138 more than the average price of 1 m² in the city.

In October, the cheapest district in Warsaw was Rembertów with a price of PLN 12,056 per 1 sq m. The second cheapest district is Białołęka with the price per 1 sq m of apartment at PLN 13,265. Third place was taken by Wawer, where 1 m² of apartment costs PLN 13,321.

A different list of the most expensive districts in Warsaw was prepared by the website RynekPierwotny.pl. Śródmieście was also indicated there as the most expensive district, but with the metro price exceeding PLN 40,000. zloty. Wola was second in the ranking (apartments here cost on average PLN 27,165 per sq m), and Żoliborz was third (prices from PLN 25,654 per sq m). The visible difference may result from the fact that RynekPierwotny.pl takes into account the prices of apartments delivered by developers, and does not take into account the secondary market, which moderates the prices of developer apartments.

The most expensive mortgage loans

It’s not just construction costs that make real estate in cities very expensive. The final bill for people using external financing is increased by the very high costs of mortgage loans. The interest rate on a newly taken out mortgage loan in Poland is on average 7.91 percent and is the highest in the European Union. Even in Hungary, where the central bank base rate is 6.75 percent, mortgage rates average 7.03 percent.

In the Czech Republic, where apartment prices per square meter are higher in relation to earnings than in Poland, the interest rate on apartment loans is significantly lower and amounts to an average of 4.88 percent.

Until the Monetary Policy Council reduces interest rates (and this is not expected this year, maybe the beginning of 2025 will bring better news for borrowers), loan servicing will remain horrendously burdensome.

The Bankier.pl website took into account data from the European Central Bank (euro zone, July 2024) and several national banks in Europe. The ranking clearly shows that Poland is at the top in terms of mortgage interest rates. Only Serbia, which is not an EU member, is ahead of us in the ranking.

Serbia – 11.50 percent
Poland – 7.90 percent
Romania – 7.38 percent
Hungary – 7.24 percent
Norway – 5.73 percent
Latvia – 5.68 percent
Estonia – 5.53 percent
Lithuania – 5.36 percent
Czech Republic – 4.88 percent
Denmark – 4.75 percent
Sweden – 4.44 percent
Great Britain – 4.34 percent
Cyprus – 4.33 percent
Slovakia – 4.19 percent
Finland – 4.10 percent
Ireland – 4.08 percent
Luxembourg – 3.95 percent
Austria – 3.94 percent
Germany – 3.92 percent
Netherlands – 3.88 percent
Greece – 3.87 percent
Croatia – 3.75 percent
Portugal – 3.70 percent
Slovenia – 3.61 percent
Italy – 3.44 percent
Belgium – 3.41 percent
France – 3.41 percent
Spain – 3.34 percent
Bulgaria – 2.53 percent
Switzerland – 2.21 percent
Malta – 2.19 percent

What does this mean in practice? Let’s consider a simple example. 30-year loan for PLN 500,000 zloty. Own contribution PLN 100,000 PLN, fixed interest rate of approximately 8 percent indicated in the table. Then we have to repay approximately PLN 1 million. Twice as much. It’s worth thinking really carefully.