Easier access to data from the Property Price Registers (RCN) is a major change. Unfortunately, these records sometimes contain apartment prices that look quite odd. Why is that?
The government’s announced apartment price portal (Portal DOM) has been overshadowed by easier access to data from the Property Price Registers (RCN). For a long time, these registers were used mainly by property valuers, while access for ordinary individuals was limited by fees and, at times, a rather cumbersome application process. A great deal has now changed, and some cities have published data from the Property Price Registers in a user-friendly format available to everyone, for example as interactive maps. Warsaw, for instance, has chosen this solution. Using the capital as an example, it is worth explaining why RCN data sometimes contains highly surprising results, such as very low prices per square meter.
In brief
When reviewing RCN data, we may come across low apartment prices per square meter that differ sharply from the local average. The reasons may vary. They include, for example, the trading of ownership shares in apartments and transactions that are only seemingly market-based.
It is also worth checking whether the transaction actually concerns residential units. In newer apartment blocks, shares in underground parking halls that constitute separate commercial premises are often sold.
RCN data may help in valuing an apartment, but only as one of several elements. The register lacks information, for instance, about the condition of the unit and the building, as well as possible encumbrances, such as a registered right of residence.
Transactions involving ownership shares are one of the main complications
When looking at the Warsaw RCN map already mentioned above, we can see, among other things, that in similar or even identical locations, the total sale prices of apartments from the same transaction year can differ significantly, despite similar floor areas. What could explain this? It is always worth checking whether the entire unit was sold or only a fractional share, such as one-half.
“This is especially important because RCN data sometimes shows transactions involving very small shares, for example one-sixth or one-eighth of an apartment,” explains Leszek Markiewicz, who runs the Warsaw-based real estate agency NieruchomosciSzybko.pl.
The Warsaw price map includes information about shares, but some websites that republish RCN data omit references to the fractional nature of such transactions. If we calculate the price per square meter of an apartment based on the price of a share, while taking into account the full floor area of the flat, the result will be very low. There is also another important issue. Shares are often priced disproportionately to the value of the entire property.
“For example, a half-share may be sold for much less than half the price of the whole apartment. We should remember that trading in ownership shares is a highly specific activity, mainly of interest to investors,” emphasizes Leszek Markiewicz of NieruchomosciSzybko.pl.
Beware of transactions involving shares in underground garages
In the case of RCN data presented on the Warsaw city map, it is impossible to avoid transactions involving shares in underground garages. It is worth recalling that in many newer buildings, the garage hall is not part of the common property but functions as a separately designated unit. In such cases, buyers of a parking space purchase a share in a commercial unit, independently of the apartment transaction itself.
On websites drawing data from the RCN, we may sometimes find “garage” transactions mixed together with those concerning residential premises. “What is more, such transactions are sometimes presented without taking into account the small purchased share in the commercial unit, which makes the purchase price per square meter look extremely low,” says Leszek Markiewicz of NieruchomosciSzybko.pl.
If, on the other hand, the parking space functions as an appurtenant room or part of the common property, its presence also affects the total apartment price, although separate purchase is then excluded. The sale price is also influenced by other spaces connected with the apartment, such as storage units or even ground-floor gardens used exclusively under a quoad usum agreement, not to mention balconies and terraces.
“When trying to value an apartment, it is impossible to avoid the issue of additional spaces,” stresses Leszek Markiewicz of NieruchomosciSzybko.pl.
Sometimes the market nature of a transaction is only theoretical
Another issue in the context of RCN data is the nature of a transaction, which may not be entirely market-based. The property itself may also differ substantially from the average. A good example is a transaction involving the transfer of ownership of an apartment that had previously been adapted from a common area, such as an attic, with the approval of the housing community. Such a transaction may be classified as market-based, yet the purchase price of the apartment may be low.
“Prices that differ sharply from the average can also be generated by transactions between related parties selling an apartment to one another cheaply, or by sales of heavily damaged properties, for example after a fire or vandalism,” adds Leszek Markiewicz of NieruchomosciSzybko.pl.
Can an apartment be valued on the basis of RCN data?
One more factor affecting the transaction price may be the legal status of the apartment. Only after reviewing the land and mortgage register can we determine, for example, that the unit is encumbered by a compulsory mortgage or a personal right of residence in favor of a senior citizen. This is why analyzing the contents of the land and mortgage register is a basic element of due diligence for residential property, not only for a valuer preparing a valuation, but also for a typical buyer.
“The greatest risk is the potential for legal problems that are harder to detect,” concludes Leszek Markiewicz of NieruchomosciSzybko.pl.
Source: https://ceo.com.pl/dane-rcn-o-cenach-mieszkan-jakie-sa-z-nimi-problemy-64893
