Residential roulette

Many of my colleagues have written Endpiece columns describing their trials and tribulations when it comes to finding an apartment on the stormy seas of the open market. I, too, could write this article on exactly the same topic, as due to a sudden change in my circumstances, I found myself temporarily homeless…

Since I first arrived in Poland in 1995, I’ve lost track of how many places I’ve lived in, but it has been at least thirteen. So I suppose I shall talk a little about the rental market, but that’s not all I’ve got to say. Before I moved into my current abode, I took a look at what was on offer on the PRS market in spite all the hype; but from my personal point of view I can say that it’s not all that it’s cracked up to be. I was offered a minimally furnished apartment, which wasn’t particularly cheap, and before I’d even got to the stage of signing the lease I was forced to jump through the administrative hoops of proving my income. When I left the UK, finding a place to live was all about finding a private landlord from a newspaper ad and paying a month’s rent in advance as a deposit. Not anymore. My brother recently returned to London after having lived in India, and since the UK market is now entirely dominated by PRS, he was forced to pay an entire year’s rent in advance. These were the only terms he was offered because he had no rental history. From what I understand, in the UK parents have to vouch for their offspring when they want to leave home. I cannot regard this as good for the consumer. To my chagrin, just like my colleagues, I was to discover that the private rental market in Poland is now moving in the same direction. More often than not, landlords demand that you already have a place to live. But if I had an address, I wouldn’t be looking for one. And just as one of my colleagues pointed out, applying for the position of tenant is just like entering a bizarre beauty contest. However, if you’re prepared to look around you can still find a fully furnished apartment – with a month’s rent in advance as a deposit being the only precondition.

If rentals look bad, buying your own place seems like betting your life’s savings in a casino. When I first came to Poland there was simply no way anybody making a normal wage could afford to buy an apartment, so the banks got creative. In 1995, they invented Alicja mortgages, whereby mortgagees could pay minimal rates and any shortfall would be added to the original loan. Despite making their regular payments, people went on to discover that their equity in their homes actually shrank. The belief at the time was that the market would eventually stabilise and everything would somehow sort itself out, but eventually – at a time of raging inflation – it didn’t.

After having been sued by almost everyone for this debacle, the banks came up with another brilliant scheme. Interest rates were still unaffordable, but if everything was denominated in a foreign currency there would be a different (meaning lower) rate to pay. The Swiss franc looked like a good bet. The fact that this opened homeowners up to currency exchange risk was completely disregarded – and when the Swiss franc inevitably soared in value, the banks were once again sued by almost everybody. My money is sitting in a bank in the UK open to the same exchange rate risk as a Swiss franc mortgage and now we are re-entering a time of inflation. With the government promising to protect little people from its worst effects by taxing less and spending more, their intention clearly seems to be to further expand the money supply. The central bank (providing the politicians don’t take control of it) should react and try to reduce this supply by raising interest rates, which is in itself a form of inflation since the cost of borrowing money will rise. In my opinion, inflation is most probably going to reach some horrendous double-digit percentage and right now I find myself playing the roulette wheel of the property market. Prices have risen so dramatically it would be unsurprising if we eventually had a bubble on our hands; but on the other hand, these rises are also easily explained by the basic lack of housing. Property has always been seen as a great hedge against inflation, but I still know many naysayers who are arguing the exact opposite. Even though someone has to have a place to live, I stand on the brink of a chasm as I consider spending over PLN 400,000 while I still can. And yet I still dither.