The study, conducted by the Royal Institute of Chartered Surveyors, showed a massive 58 per cent increase in the country's house prices – rising to almost 100 per cent in the popular market town of Krakow (pictured).

"Poland is a hugely growing market," says Greg Heywood, founder of UK and Polish estate agency The Step. "There is a housing shortage of 40,000 homes a year. Earnings and the standard of living are increasing dramatically while interest rates are just three per cent and it is possible to obtain mortgages of 90-100 per cent."

The dramatic house-price hikes in Krakow are thought to be largely due to burgeoning tourism. The city, with its beautifully preserved medieval centre, attracts upwards of seven million international visitors every year, making for a lucrative buy-to-let market. Last year, average house prices increased by 58 per cent in Krakow, while some properties around the main square saw a virtually unprecedented 100 per cent rise.

Property Secrets is currently offering apartments in the Sunny Hill development, located on the outskirts of Krakow. Within easy reach of all amenities and featuring secure underground parking, prices within the development average at 6,560 PLN (£1,129) per square metre – a 6.3 per cent discount on the market value. With the strong property market in Krakow showing no signs of a future dip, an apartment in a development such as this could be a sound investment.

But Krakow isn't Poland's only property hotspot. According to Pauline Scrace of International Horizons, Warsaw is the place to put your money. "Warsaw, Poland's capital, will always reign supreme when it comes to market standards," she says. "Krakow is actually the hardest city in Poland to get building permission, and the development returns are not as great as in Warsaw and its surroundings." In fact, Scrace claims that "It is actually a tourist delusion that Krakow is Poland's property hotspot."

Simon Tweddle, head of research and analysis at Property Secrets, agrees that Warsaw property represents a sound investment. He has described the capital as 'a bit like London' with the low risks associated – adding that its market is still in the process of maturing.  

Those looking to invest in Warsaw could consider the Ostoja Wilanow development, located  between Klimczaka and Sobieskiego street in the district of Wilanów. Polish Property Investments is currently offering apartments in the complex, with prices between 1,100 euros and 1,900 euros per square metre. And if Poland continues to hold its own as Europe's top property hotspot, this outlay should yield a substantial return. 

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Read articles about other Eastern European emerging markets:
Slovenia awaits impact
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Poland property investment looks promising

Article published on 15 February 2007