Renting or buying an apartment. Which option is better?
Over the years, more and more Poles decide to buy their own apartment. Despite this, rental still has its supporters. Which of the two options - purchase or rent - is the most advantageous? Lions Estate experts comment.
Purchase more profitable
Deciding to rent an apartment for a long time – even in the case of a declared, permanent location of life – is a standard in many European countries. However, when it comes to Poland, trends are shaped in a completely different way. According to data presented in Eurostat surveys, as much as 83.5 percent. Poles own real estate. The index in our country is one of the highest in the entire European Union. Most Poles also strive to have their own property. Consumer behavior, however, is mostly not dictated by preferences, but by necessity and the belief that the purchase is profitable. Poles definitely prefer to live on their own and pay the loan installments, than to rent and transfer money to the apartment owner’s account for years.
– With the current level of inflation and loan costs, it is definitely more worth buying your own money than renting it out. The purchase also makes more sense, especially if we care about a specific location, where there will not be a lot of new real estate offers. In addition, real estate prices (especially premium) should increase steadily and systematically. Therefore, it is worth buying today, because tomorrow it will be more expensive – comments Rafał Lewandowski, Partner at Lions Estate.
Despite the need to take out a loan and have been associated with a bank for many years, the purchase of your own apartment has an unquestionable advantage. It allows you to decide about yourself without the need to consult the owner of the apartment each time (as in the case of a rented apartment), it provides stabilization and comfort of life. It is also an excellent investment and an important component of personal wealth that we can use or – in the future – inherit.
– The present moment creates an excellent opportunity to buy an apartment or a house. Real estate prices in Poland are still lower than in Western Europe. Real estate is one of the safest forms of capital investment, remaining immune to any crises or fluctuations on the stock market – comments Bartłomiej Annusewicz, CEO of Lions Estate
Freedom and flexibility
Proponents of renting apartments indicate freedom, flexibility and the lack of long-term obligations as the main advantages of this solution. People deciding to rent can often afford to buy a flat. However, they prefer to remain flexible and not be tied to one location for a long time. In the case of renting a flat, we do not have to worry about currency fluctuations, rising interest rates or inflation, we can also change the place of residence to a completely different one at any time.
– Most often, people who value freedom and independence in their lives decide to rent an apartment. They often travel a lot (also professionally), constantly changing their place of stay. For such people, the logical solution is to rent. At Lions Estate, we often act as an intermediary in the rental of houses or flats to diplomats, expats and foreign managerial staff who come to Poland for a specified period of the contract – says Paula Perz, Partner at Lions Estate
When analyzing the situation on the Polish rental market, experts note that when it comes to mid-priced real estate, it is mostly young people who decide to rent. According to research carried out at the request of the BIG InfoMonitor Debtors Register, in 2019 almost 30% of tenants were people under 24 years of age.
The pandemic has created new trends in the market
In large cities such as Warsaw, Wrocław and Kraków, the prices of flats for rent in recent years have been record high and have continued to grow. The situation was radically changed by the pandemic, which significantly reduced the popularity of mid-segment real estate rental, reducing prices. Reason? Many young people who rent a flat in large cities on a daily basis, due to remote learning and work, returned to their family homes, vacating premises that could not find new tenants.
– The last year, due to the flooding of the market with short-term rental apartments, was very unusual. At that time, the supply significantly exceeded the market demand and it was tenants who began to dictate the terms more. Following this lead, many of them were able to negotiate lease terms very favorably, and in most cases owners were willing to make concessions and agree to terms that were previously well below market standards. In this sense, lease has definitely become a more advantageous option for tenants than before the pandemic. On the other hand, taking into account the galloping inflation in Poland and the decline in the value of the PLN, this is a good time to invest your capital in real estate. This makes sense for cash clients, but also – due to relatively inexpensive loans in our country – for clients using bank financing – comments Julia Kostrzewa, Property Advisor at Lions Estate
A completely different trend is the huge popularity of real estate located on the outskirts, as well as spacious apartments with terraces. Interest in this type of real estate results mainly from the change in the way of working and living. Today, we work from home much more often than before, which entails the need to have a larger living space. Houses with gardens that allow you to commune with nature without leaving the private zone are popular.
– Currently, renting an apartment is very profitable, because due to the pandemic prices are at record low. Nevertheless, the purchase of real estate is always a good idea – it is a safe investment that gives the possibility of a stable return in the future – says Alicja Chmura, Partner at Lions Estate.
So is it better to rent or buy an apartment?
There is no clear answer to this question. When making decisions about the future of housing, one should take into account, first of all, our lifestyle, needs, plans for the coming years (e.g. enlarging the family), but mainly correctly estimate our financial possibilities. When buying a flat on a loan, you should take into account the need to provide your own contribution (usually in the amount of 20% or 10% of the value of the property purchased) and subsequent monthly obligations. As experts emphasize, both the rental and purchase of an apartment can be attributed a similar number of pros and cons. Ultimately, it is up to each client which of them will appeal to him more.
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