Munich, Frankfurt, Toronto, Hong Kong, Paris, Amsterdam and Zurich – these are the cities where, according to Swiss analysts, there is the greatest risk of overheating the market real estate. In total, UBS in its report analyzed 25 cities from around the world – popular among investors – and believes that only one of them (Chicago) housing prices are undervalued.
In the UBS analysis, it does not comment on the situation on the Polish market, but it seems that some of the trends reported by analysts can be observed in our country as well.
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Housing prices did not collapse because government programs helped
Experts point out, for example, that in times of a pandemic housing prices they did not collapse in many cities, and even – especially in the second quarter – began to rise. In their opinion, this is due to protective measures taken by governments – various types of subsidies to wages, rents or restrictions in carrying out evictions due to non-payment of mortgage installments. But these activities are coming to an end.
– It is clear that the current price increases are not permanent – the report reads. – Rents are already falling in most of the cities we have analyzed, which suggests that there is likely to be a correction phase as soon as government subsidies disappear and pressure on household incomes increases, experts from UBS continue.
Moreover, according to experts, prices flats in some of the analyzed cities have reached a level that means that their purchase will pay off after 35 years of renting. And such a long period makes this type of investment rather unprofitable.
“Now is certainly not a bad time for property owners to consider profit taking,” said Claudio Saputelli, head of real estate investment at UBS Global Wealth Management. In practice, this means that the board of Swiss bankers reads: “Sell the apartment now.”
The Polish market is different
It is always a mistake to simply compare the situation in cities such as Munich, Frankfurt or Paris to what is happening in Warsaw or Krakow. Our housing market is different – mainly because prices there are still much lower than in many Western cities. Moreover, in Poland we still have an unsatisfied huge natural demand for apartments.
Nevertheless, it is worth following the domestic trend carefully. For two reasons. Firstly, in the second quarter, sales of apartments in Poland dropped sharply – the report of the redNet Property Group and CBRE shows that in the largest large cities it decreased by 37%. up to 55 percent compared to last year’s data.
Secondly, in large centers, rental prices have stopped and even started to drop slightly.
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