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WARSAW, Poland Klaudia Kocimska’s dream is slipping away: She would love to own a small but modern apartment in downtown Warsaw, in walking distance to her office, with a little terrace for savoring long Sunday brunches.

Like many Poles hoping to buy a home, the 30-year-old journalist has resigned herself to painful compromises — having to live in a suburb and commute by car — as soaring housing prices driven partly by foreigners put much of the city’s best property off limits to normal working people.

House and apartment prices in Warsaw and other leading Polish cities have spiraled upward since the eve of the nation’s 2004 entry into the European Union — a boom driven by low interest-rate mortgages, housing shortages and foreign speculators snapping up real estate as investments.

“The market is very hot,” said Bogumil Rutkowski, a manager at the Knight Frank real estate agency in Warsaw. “We’ve had a boom since the second half of 2003, but it’s just been accelerating more and more lately.”

In 2005 alone, real estate prices in Warsaw rose 30 percent in prime locations, and between 10 and 20 percent in other areas amid the strong demand, according to Knight Frank. Now, for example, a one-bedroom apartment in central Warsaw of 65 square meters (700 square feet) runs between 280,000 zlotys and 1 million zlotys (about US$90,000 to US$325,000; €70,000 to €250,000).

“The demand is generally driven by local people but there are buyers from Spain, the U.K. and Ireland buying new constructions in bulk — 10, 20 or 30 apartments and sometimes even more,” Rutkowski said. “They compare Poland to Ireland and Spain of 20 and 25 years ago, and they believe the price appreciation in residential property there will happen in the same way in Poland.”

But as housing prices in this former communist country rise, wages for most Poles remain low compared to western European levels — making much of the housing stock unaffordable for them. Last year, gross domestic product in Poland was at €11,700 (US$15,000) per capita, significantly lower than Ireland’s €32,100 (US$41,000) or Britain’s €27,000 (US$35,000), according to Polish government figures.

“The foreign speculators are pushing the bar up for normal buyers,” said Andrzej Halesiak, an economic researcher with the BPH Bank who has studied the issue.

Some of the difficulty is offset by easily available low-interest loans, but most house and apartment hunters these days still grumble.

They say that not only are prices rising dramatically but that any good deal that appears on the market gets snapped up immediately.

“I am really fed up,” said Kocimska, a journalist for Polish state television, describing her months of fruitless searching. “I started looking too late — I really should have started last year.”

Kocimska had her sights set on a project still under construction between Warsaw University and the left bank of the Vistula River, a small ground-floor apartment with a patio jutting into a patch of green. Unlike most of the older buildings in central Warsaw, it will have a parking garage — an important factor for Kocimska.

The price was 400,000 zlotys (US$130,000; €100,000) for about 50 square meters (540 square feet) — the most her bank was willing to lend her — but in the two days it took her to decide, someone else was faster. “That apartment was my dream,” she said.

Now, there are very few other newly constructed buildings available in central Warsaw, and Kocimska says she’s thinking about buying in the suburbs or an older building in town even though it won’t have a garage or give her the chance to design the interior from scratch.

“I’ve become really flexible,” she said.

The new prime minister, Jaroslaw Kaczynski, promised in his first policy speech in July that he would make new construction a priority. But observers say too little land has been cleared for building to ease the crunch in the near future.

All the talk of prices and shortages masks an even deeper cultural shift as Poles learn to view property as an investment and take out mortgages to buy it, experts say.

Darek Karbowniczak, an agent with the Ober-Haus real estate agency, said it marks a sharp change from communist times, when saving U.S. dollars in cash was one way people held on to their wealth. Even in the early years after the 1989 collapse of communism, mortgages were hard to come by and buyers usually paid for property in cash.

But with Poland now in the EU, banks have begun granting mortgages easily as membership has prompted greater competition in the banking market, Karbowniczak said. And as the dollar has weakened in past years, Poles no longer view it as a guarantee of financial security.

“The most striking thing in all of this is that Polish people learned very quickly to think in a capitalist way,” he said.

Though the housing boom is playing out throughout many cities in Poland and elsewhere in other Eastern Europe countries that joined the EU in 2004 — from the Czech capital of Prague to Riga in Latvia — the drama seems especially poignant for Warsaw, given the ravages inflicted on it during the 20th century.

The once-picturesque capital was almost completely destroyed during World War II, and in the following decades the country’s communist authorities filled it with drab, uniform housing blocks.

Today, that style still defines much of the landscape, making the random areas of older villas and parks all the more desirable. The supply of new and well-renovated housing isn’t keeping up with demand in the capital, home to 1.7 million people and growing.

For now, new housing is a precious commodity — one that Peter Turner, 65, a semi-retired property developer from Falmouth, Britain, hopes to cash in on.

Turner recently viewed Warsaw’s new “Vistula Garden” building complex across from a tree-lined stream, trying to decide whether to buy several units in the project still under construction.

He had never been to Poland before, but said he was convinced that buying property now would be a good investment.

“Poland has a highly educated population, similar to Ireland. The Irish went abroad with their education and skills and came back with money,” Turner said. “I see no reason why it shouldn’t follow the same pattern here.”

He said he briefly considered buying property in Bulgaria and Romania, but decided it would be too risky.

“Bulgaria and Romania aren’t part of the EU, and it’s not yet clear if they’ll be let in next year,” he said. “There’s a big question mark there. But I feel comfortable in Poland.”

Source: IHT

• Europe Real Estate Country Guide – Poland
• Colliers Market Report – Warsaw