Is buying an apartment for investment purposes with the use of leverage in the form of a mortgage a good idea in the current situation? Will the Polish Deal program introduce changes to the real estate market that may be significant from the investor's point of view?
High inflation, low interest rates and an increase in wages
Considerations on the current situation on the real estate market (Q4 2021) should start with the fact that recently the prices of apartments have increased significantly. The trend is clearly growing, yet there are many people willing to buy flats. It is difficult to clearly define which factors affect such a situation on the real estate market, but one of them is the record low interest rates, thanks to which taking out a mortgage is easier than ever before. Besides, one cannot be indifferent to the increase in wages. In 2017, the minimum wage was PLN 2,000 gross and in 2022 it will be PLN 3,010 gross. This means that even the least-paid Poles earn within 5 years a gross increase of 50%. If we add to this data the fact that the current official inflation rate is as high as 5.8%, it is hardly surprising that there are gains in the real estate market.
So is there still a good time to invest in real estate?
A lot of people buy an apartment for their own use, because in most of the largest cities in Poland the rental fees (excluding meter and administrative fees) are lower than the monthly loan installments. Of course, individual preferences are still of great importance and many people still prefer to rent over a loan, but departing from individual preferences, it can be concluded that the current situation on the real estate market makes taking out a loan for your own housing needs seems to be a reasonable solution from a financial point of view (not taking into account take into account the risks in the form of raising interest rates, the risk of future job loss, etc.).
What is the situation from the investor's perspective? People who have invested in real estate in recent years have successfully protected their capital against inflation. However, or further investing in real estate it will be so it will be just as profitable that of course no one knows. When it comes to dividends in the form of monthly rent, the situation is also becoming more and more complicated here. A few years ago, the ROI 7%-9% seemed to be the most achievable result. Currently, rentiers value annual profits of around 5%. That is why more and more investors are looking for alternatives. Instead of investing in studios, they are becoming more and more popular commercial premises.