Dariusz Pęchorzewski, PhD

Szczecin Renovation Centre Ltd.

Institute of Economic Analyses, Diagnoses and Forecasts

The impact of the global financial crisis on selected aspects of the local residential property market in Poland

1

Overview

OBJECT OF STUDY:

Transaction prices of residential properties

PERIOD OF STUDY:

2005 – 2009

2

Overview cont.

CRITERIA:

I. Ownership rightFreeholdCooperative member's ownership right

II. Segmentation of the local marketFloor area of the property

3

Geographical area of study

SZCZECIN

Population: 400,000 (as of 12.2008; 7th city in Poland in terms of population)

Area: 300 sq. km (3rd city in Poland)

4

Ownership rights

Freehold: Transferable, conveyable, hereditary Unlimited in time

Cooperative member's ownership right: Limited right in property Transferable and inheritable Transferability is limited (buyer must be accepted as member of the cooperative)

5

Research resultsResidential property overall

0 zł

1 000 zł

2 000 zł

3 000 zł

4 000 zł

5 000 zł

6 000 zł

11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7

2005 2006 2007 2008 2009

cooperative member's ownership rightto residential premises

privately owned apartments

Average transaction prices per 1 sq. m

FreeholdCooperative member's right to property

6

Research resultsResidential property overall cont.

Coefficient of variation of prices

0%

5%

10%

15%

20%

25%

30%

35%

40%

11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7

2005 2006 2007 2008 2009

cooperative member's ownership rightto residential premises

privately owned apartments

7

Research resultsResidential property overall cont.

Number of transactions

0

20

40

60

80

100

120

140

160

180

200

11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7

2005 2006 2007 2008 2009

cooperative member's ownership rightto residential premises

privately owned apartments

8

Research resultsResidential property overall cont.

Structure of the real property market in Szczecinaccording to the specified rights

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7

2005 2006 2007 2008 2009

privately owned apartments

cooperative member's ownership right to residential premises

Freehold

Cooperative member's right to property

9

Research resultsSmall apartments [up to 40 sq. m]

Average transaction prices per 1 sq. m(small apartments)

FreeholdCooperative member's right to property

0 zł

1 000 zł

2 000 zł

3 000 zł

4 000 zł

5 000 zł

6 000 zł

11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7

2005 2006 2007 2008 2009

cooperative member's ownership right to residential premises

privately owned apartments

10

Number of transactions(small apartments)

Research resultsSmall apartments [up to 40 sq. m] cont.

0

10

20

30

40

50

60

11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7

2005 2006 2007 2008 2009

cooperative member's ownership right to residential premises

privately owned apartments

11

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7

2005 2006 2007 2008 2009

privately owned apartments

cooperative member's ownership right to residential premises

Structure of the real property market in Szczecinaccording to the specified rights (small apartments)

Freehold

Cooperative member's right to property

Research resultsSmall apartments [up to 40 sq. m] cont.

12

Coefficient of variation of prices(small apartments)

Research resultsSmall apartments [up to 40 sq. m] cont.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6

2005 2006 2007 2008 2009

cooperative member's ownership right to residential premises

privately owned apartments

13

Research resultsAverage apartments [40 to 70 sq. m]

Average transaction prices per 1 sq. m(average apartments)

FreeholdCooperative member's right to property

0 zł

1 000 zł

2 000 zł

3 000 zł

4 000 zł

5 000 zł

6 000 zł

11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7

2005 2006 2007 2008 2009

cooperative member's ownership right to residential premises

privately owned apartments

14

Number of transactions(average apartments)

Research resultsAverage apartments [40 to 70 sq. m] cont.

0

20

40

60

80

100

120

11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7

2005 2006 2007 2008 2009

cooperative member's ownership right to residential premises

privately owned apartments

15

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7

2005 2006 2007 2008 2009

privately owned apartments

cooperative member's ownership right to residential premises

Structure of the real property market in Szczecinaccording to the specified rights (average apartments)

Freehold

Cooperative member's right to property

Research resultsAverage apartments [40 to 70 sq. m] cont.

16

Coefficient of variation of prices(average apartments)

Research resultsAverage apartments [40 to 70 sq. m] cont.

0%

5%

10%

15%

20%

25%

30%

35%

40%

11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7

2005 2006 2007 2008 2009

cooperative member's ownership right to residential premises

privately owned apartments

17

Research resultsLarge apartments [over 70 sq. m]

Average transaction prices per 1 sq. m(large apartments)

FreeholdCooperative member's right to property

0 zł

1 000 zł

2 000 zł

3 000 zł

4 000 zł

5 000 zł

6 000 zł

11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6

2005 2006 2007 2008 2009

cooperative member's ownership right to residential premises

privately owned apartments

18

Number of transactions(large apartments)

Research resultsLarge apartments [over 70 sq. m] cont.

0

10

20

30

40

50

60

11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7

2005 2006 2007 2008 2009

cooperative member's ownership right to residential premises

privately owned apartments

19

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7

2005 2006 2007 2008 2009

privately owned apartments

cooperative member's ownership right to residential premises

Structure of the real property market in Szczecinaccording to the specified rights (large apartments)

Freehold

Cooperative member's right to property

Research resultsLarge apartments [over 70 sq. m] cont.

20

Coefficient of variation of prices(large apartments)

Research resultsLarge apartments [over 70 sq. m] cont.

0%

10%

20%

30%

40%

50%

60%

70%

11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5

2005 2006 2007 2008 2009

cooperative member's ownership right to residential premises

privately owned apartments

21

Conclusions

Changes in prices and number of transactions were similar in all studied segments

Greater price variability was observed for freehold flats

Fall in prices was more moderate than the decline in the number of transactions

Prices of apartments in cooperatives were higher than prices of freehold apartments

22

Thank you for your attention

70-440 Szczecinul. Ks. Bogusława X

52/2tel.: 091 43 23 120fax: 091 43 23 130e-mail: scr@scr.pl

www.scr.pl 23