Only a few years ago, most Poles believed that one of the most important goals of every person is to buy their own flat. Today, there are more and more people who give advantage to the rental, believing that it allows for greater mobility, freedom and independence. We will try to explain which side is actually right and what is more convenient – renting or buying.

Economic rationality of renting and mortgages

Economic rationality of renting and mortgages

Let’s compare on a specific example the cost of buying an apartment in a mortgage and the cost of renting a property. However, it is worth noting that the lease of the flat, during which we do not set ourselves the goal of raising money for our own flat is financially more profitable than buying on the basis of a mortgage.

Output data

house

It is impossible to fully predict how the real estate market will behave in the next 10 years. There are too many unpredictable factors, for example: the economic situation in the country, the Central Bank’s policy, and even stability in the European Union, which have a decisive impact on the cost of renting and selling apartments. Experts, however, still believe that real estate investments are the basic type of investment in Poland.

 

Renting an apartment

Apartment in credit

Studio apartment in Warsaw (50 m 2 )

PLN 300,000

PLN 300,000

Monthly cost

PLN 1,500

PLN 1240

The repayment date

30 years

30 years

Cost after 30 years

PLN 540,000

PLN 446 400

Additional fees

Advance payment – PLN 1200

Own contribution – 50 thousand zł

Perimeter charges – 6,000 zł

Media

PLN 300

PLN 300

Renovation

Lack

The lowest cost – 49 thousand zł

Total cost

PLN 649 200

PLN 659 400

Expenses in full and overpayment are distributed as follows:

The calculations made allow us to state that:

  1. The higher the actual level of inflation, the less profitable it is to save money and rent a flat.
  2. If the flat does not increase in price relative to the level of inflation, you will be able to save your own flat sooner.
  3. With a rate increase of at least 2%, the mortgage becomes less profitable than renting.
  4. Without taking into account the level of increase in purchase and rental prices, renting will be cheaper than a mortgage.

How much does it cost to lease and buy an apartment?

How much does it cost to lease and buy an apartment?

The lease of an apartment in Poland depends not only on its quality and location in the city, but also on the region. Indeed, we will pay more for an apartment in big cities, popular tourist areas and well-developed regions of the country. First of all, we will consider in which Polish voivodeships we will pay the most for the rent, and in the least.

As the table shows, in Silesia we can buy the cheapest flat in Poland, while the most “expensive” regions are Wielkopolska, Mazowsze and Małopolska.

 

A one-room flat

A two-room flat

Warsaw

200,000 zł

300,000 zł

gdańsk

180 thousand zł

240 thousand zł

Katowice

140 thousand zł

190 thousand zł

Poznan

170 thousand zł

210 thousand zł

Cracow

190 thousand zł

270 thousand zł

Wroclaw

180 thousand zł

250 thousand zł

When deciding to buy a flat, it is also worth mentioning that its cost is often determined based on market demand, which in turn may seem very paradoxical. E.g:

  • We will pay more for an apartment in a suburban town than in the capital itself;
  • Apartments in Sopot and Zakopane cost more than in Warsaw (PLN 9364 and PLN 9520, compared to PLN 8,325);
  • We will buy the cheapest apartment in Zawiercie and Żagań – a square meter costs PLN 2190 and PLN 2103 respectively.

When we think about how much the mortgage apartment (square meter) costs in different Polish cities, we will come across the following numbers:

City

3-room

2-room

1-room

Szczecin

5147

5204

5238

Bydgoszcz

4948

4977

4974

gdańsk

7276

7286

7401

Olsztyn

4771

4943

5011

Bialystok

5115

5250

5381

Warsaw

8842

9219

9402

Torun

4936

5071

5228

Poznan

6477

6641

6939

Lublin

5283

5371

5522

green Mountain

4147

4682

4725

Wroclaw

6565

6737

7250

Kielce

4731

4674

4659

Boat

4997

4974

5059

Opole

4767

5078

4953

Katowice

5122

5133

5127

Cracow

7080

7246

7655

It turns out that we will pay the least for a flat in small Polish cities located in depressive regions. In turn, the most expensive will be housing in voivodship centers. In addition, as evidenced by the table presented, no matter in which region of Poland we decide to buy our own flat without a loan, we will pay the least for a square meter if we buy a flat with a larger area.

Read also: How much does it cost to repair an apartment and how to reduce its costs?

Rent or mortgage: issues worth attention

Rent or mortgage: issues worth attention

When deciding on a mortgage or buying a flat, it is worth paying attention not only to mathematical settlements, but also to other aspects concerning the advantages and disadvantages of these methods of acquiring your own flat. Consider them now in more detail.

Advantages of the mortgage:

  • After buying a flat on the basis of a mortgage, we can immediately register the property and live there;
  • The real estate acquired on the basis of the mortgage is transformed into our asset, which we can manage at our discretion (sell, transfer, rent, etc.);
  • It is possible to obtain a tax credit for the purchase of an apartment.

Mortgage defects:

  • In the event of financial difficulties, we may lose our own flat;
  • By systematically making payments for a mortgage, you will not be able to collect savings.

When deciding on a loan for a property, we should remember that it involves a number of additional fees, which are presented in the table below:

Initial costs

0-0.6% of the loan value

Insurance

Up to 20% of the purchased property

Fees for maintaining a personal account

0-2.5%

Tax on civil law transactions related to the acquisition of real estate

2%

Fees with early repayment of the loan

Up to 3%

Property valuation

Up to PLN 1200

It is also worth remembering that inflation affects the rental of a flat to a lesser extent than to buy it on the basis of a loan.

In turn, the arguments confirming whether renting a flat is profitable:

  1. Deciding to rent an apartment we do not undertake any obligations;
  2. The rented flat can be replaced at any time;
  3. You do not need to have official earnings to rent a flat;
  4. The free funds that you can pay after renting can be saved.

Here are just some of the advantages of renting apartments indicated by experts:

  • You do not need to spend money on repairs every 5-10 years. Renovation always costs 1.5-2 times more than planned, and it also takes more time. In the case of a rented flat, the owner is usually responsible for making the renovation, and after several years of living in the same place, you can always move to a higher standard flat, better finished and decorated. What’s more, in the case of selling a flat after renovation, the money spent on him almost never returns to the owner;
  • Rented flat allows you to check the true feelings of a young couple. Renting in the first 2-3 years of living together is a much better option than a mortgage loan, especially when a divorce situation occurs later;
  • Initial rental expenses are much smaller than immediately spending on buying your own apartment;
  • You can not always find the right apartment to buy, especially if you want to live in a good, comfortable and safe neighborhood. In turn, it is much easier to rent a suitable flat in such a place;
  • Renting allows for significant mobility – you can always rent an apartment close to work or even move to another city or country;
  • By inflation, buying a flat is not always a good investment;
  • The cost of housing in depressive or aging districts will certainly decrease over the years.

Analyzing whether it is worth renting an apartment, you can also find a lot of arguments against this solution.

  1. A person renting us an apartment may decide at any time to sell it or terminate the rental contract;
  2. When renting an apartment, we will not be able to install it at our own discretion.

Then we will analyze how much it will cost to rent a flat in different regions of Poland. Above all, we would like to point out that instead of analyzing various offers, we can now use a large number of rental calculators that are available online. Rental in various regions of Poland, however, has its own characteristics. Market experts say that you can rent an affordable one-room apartment on the outskirts of the city. This situation is observed in all Polish cities.

Prices for renting studios in Poland in the old type of construction are shown in the table below.

City

1-room

2-room

3-room

Szczecin

1400

2000

2800

Bydgoszcz

1100

1500

2500

gdańsk

1700

2350

2900

Olsztyn

1000

1300

1900

Bialystok

1000

1300

1900

Warsaw

1850

2600

3850

Torun

1000

1300

2000

Poznan

1300

1800

2600

Lublin

1200

180

2500

green Mountain

1100

1500

1900

Wroclaw

1600

2200

2800

Kielce

900

1300

1900

Boat

1200

1700

2300

Opole

1000

1350

1900

Katowice

1250

2100

2900

Cracow

1500

2100

3100

Rent or buy: what do you decide?

Renting or buying? As we can see, each of these solutions has both advantages and disadvantages. Therefore, before making a final decision, it is worth considering all aspects and only after a precise analysis of the advantages and disadvantages of each of the real estate purchase methods, decide on the final step.

There are also other options. For example, buying a rental apartment is a good investment in general. The highest prices for long-term rental of apartments are set in Warsaw – the minimum price for renting a one-room flat starts in the capital of 1500 PLN. The cost of living in other regions of Poland is also high. For renting a studio in Krakow, we will pay a minimum of PLN 1,300, in Wrocław even PLN 1,400.

Thinking about what will be more profitable, renting or buying an apartment, it is also worth analyzing the basic risks that arise when applying each of these methods of real estate acquisition.

Risk

Renting an apartment

Purchase of an apartment for a loan

Possible effects

Reduction or loss of stable profits

The need to look for a cheaper apartment

Credit restructuring or credit repayment deferral

Price increase on the real estate market

The rent amount may increase

It will not interact

Lower prices on the real estate market

You can ask for a reduction in the cost of renting

It will not interact

Devaluation of the zloty  

The rent amount may increase

It will not interact

Bank bankruptcy

The loan will be purchased by another bank or a loan company. The refund is guaranteed by the state, but it can take a long time.

How to save for an apartment?

As you can see, the cost of buying a flat for a loan is quite high, so it is worth asking a question about how to save money on a mortgage. Specialists recommend using a few proven solutions that will allow you to get the desired amount. Well, having the income of an average Pole, you must:

  • Set a real goal before you;
  • Determine exactly what amount you need to save;
  • Every day and monthly calculate your profits and losses;
  • Analyze monthly expenses, which will allow you to find additional sources of savings;
  • Go shopping with a thoughtful list;
  • Find an additional source of income.

Below is a table where you can quickly calculate how much money should be put off to collect the desired amount within a certain period.

 

The amount saved

Amount, monthly

% (year)

5 years

10 years

15 years

Twenty years

1000

5%

68299

155960

268475

412889

10%

78105

206639

418172

766299

15%

89720

278843

677514

1517915

20%

103514

382719

1135838

3167295

2000

5%

136598

311921

536950

825778

10%

156209

413279

836344

1532597

15%

179441

557687

1355027

3035829

20%

207028

765435

2271676

6334591

3000

5%

204897

467881

805425

1238668

10%

234314

619918

1254517

2298896

15%

269161

836530

2032541

4553744

20%

310543

1148157

3407514

9501886

5000

5%

314495

779802

1342375

2064446

10%

390523

1033197

2090861

3831493

15%

448601

1394217

3387568

7589573

20%

517571

1913595

5679190

15836477

10,000

5%

682990

1559604

2684750

4128892

10%

781045

2066394

4181722

7662986

15%

897203

2788433

6775136

15179146

20%

1035142

3827189

11357381

31672953

15,000

5%

1024485

2339407

4027125

6193339

10%

1171568

3099592

6272583

11494479

15%

1345804

4182650

10162704

22768719

20%

1552713

5740784

17037571

47509430

20,000

5%

1365980

3119209

5369500

8257785

10%

15562090

4132789

8363444

15325972

15%

1794405

5576866

13550272

30358292

20%

2070283

7654379

22713761

63345906

30,000

5%

2048970

4678813

8054250

12386677

10%

2343135

6199183

12545166

22988975

15%

2691608

8365299

20325405

45537438

20%

3105425

11481568

34075142

95018859

In summary, we can point out that if you have a profession that is in demand on the labor market and you get a good salary (and you can quickly pay off your loan for an apartment), the option with a mortgage will be more profitable for you. For all others (as experience shows – for the majority), whose income depends on bonuses or bonuses and there is always a risk of losing their job, renting is a safer option.

Taking a loan to buy a house, we will have serious obligations, but we may not supplement our own deposit for the purchase of an apartment, in the event of inability even within a few years.

In summary, it can be noted that buying a flat for a long-term mortgage is less profitable than renting a flat and saving money for the purchase of your own home. However, the difference is insignificant and amounts to only 2%.