Introduction
Poland is facing a housing crisis, defined by almost two million uninhabited dwellings (a shocking 12% of the total number of houses), a drop in the number of mortgage applications, and housing shortages for both Polish nationals and Ukrainian refugees. The crisis has been exacerbated by various factors, including the Covid-19 pandemic, significantly increased rental and mortgage prices resulting from inflation, as well as the Russian invasion of Ukraine.
Uninhabited dwellings
The national census, which was taken in Poland in early 2021, found that there are almost two million uninhabited dwellings, with 207,000 of these being in Warsaw alone, as reported by a financial news service Bankier.pl. This sadly equates to approximately twenty percent of homes in Warsaw standing empty. Several towns in Poland with populations of less than 20,000 people had a staggering 639,000 unoccupied houses between them. These figures are particularly saddening when considering the bleak number of over 30,000 homeless citizens in Poland, as well as the influx of Ukrainian refugees who are being denied housing by landlords.
It must be noted that the Covid-19 pandemic may have skewed the data slightly since the information was collected at the same time the government ordered the country to go into lockdown. However, considering that the lockdown legally prevents people from leaving their homes, it is unlikely this has impacted the data excessively; any uninhabited homes recorded would have almost certainly been genuinely unoccupied.
There are various causes of uninhabited properties, including houses being abandoned in rural villages, urban flats being too dilapidated to live in, and real estate being bought up by investors. Further, the price of such homes has been a contributing factor: land house prices grew 13.6% year-on-year in September 2022. According to data published by Eurostat, house prices in the EU in general have risen by 48.1% between 2010 and 2022.
In response to these factors, the Polish government claims to be encouraging regional authorities to turn vacant office buildings and shopping centres into affordable apartments – an idea which has only been actualised by the increase of online purchases and the number of people working remotely. The government has also attempted to empower further construction by repealing the requirements for complex permits to build single-family houses. The country’s ‘Home-Plus’ programme, which was implemented in 2016, additionally aims to multiply the amount of affordable housing for those ‘with a moderate income’. Although the Supreme Audit Office has since found that there has been subsequent slow progression associated with this programme, one remains hopeful that this stagnation has been due to interruptions by the name of the pandemic and the war in Ukraine.
In addition to uninhabited properties, Poland further faces a crisis of overcrowded homes being inhabited by families. Statistically, Poland ranks almost at the bottom among other countries in the European Union in the category of the number of rooms per person with 1.1 rooms per person, compared to the EU average of 1.6. Therefore, a flawed system appears to exist, in that the only affordable homes cannot adequately house the number of people in a family. Yet, there are excessive numbers of unoccupied housing, either too expensive or dilapidated for anyone to realistically live in.
A decrease in mortgage applications
There has been a significant drop in mortgage applications in recent months in Poland, because of the increased borrowing costs and rising inflation across the world. Shockingly, the country has experienced no less than eleven consecutive hikes in interest rates since October 2021. The abrupt, distinct increases in these rates have been catalysed by the extremely low interest rates of 2020 and 2021, during the Covid-19 pandemic. Central banks would decrease their borrowing costs to facilitate any economic growth possible to combat the effects of national and global lockdowns.
As economies reopened in the last two quarters of 2020 and after the subsequent lockdown of early 2021, the demand in the Polish housing market sky-rocketed, due to governmental support, low interest rates on both homes and deposits, as well as increasing household income. This increase in demand had a knock-on effect on the price of housing, and according to Eurostat’s house price index, house prices in the country increased 12.4% year-on-year in the second quarter of 2022.
The higher demand causing the increased price for houses, paired with the effects of inflation, reversed the effects of the post-pandemic housing boom, and demand for houses began to decrease as interest rates were hiked up in response to the increased costs of obtaining a mortgage.
This feedback cycle has harmed the residents of Poland and has fed into the issue of the number of vacant homes across Poland, which was discussed above.
Ukrainian refugees
Due to the country’s proximity to Ukraine, Poland was one of the first countries to which women and children of Ukraine fled upon the commencement of the horrific Russian invasion. In the early months of 2022, the Polish government and local authorities were overwhelmingly supportive, providing temporary shelter to refugees, and encouraging volunteers from across Poland to open their homes.
However, with the current strain on the housing market in Poland, it has been increasingly difficult for Ukrainian refugees to find adequate shelter. Social activist Jarmiła Rybicka pointed out that landlords are hesitant to rent to Ukrainians, often denying them the opportunity to even view the property upon hearing their accent on the phone. This is because landlords prefer leases which last a year; however, nobody knows or can predict how long the war will last. Paired with the increase in both inflation and mortgage rates leading to a decrease in applications, the situation is appearing increasingly sombre for Ukrainians wishing to take refuge in their neighbouring country.
Conclusion
There are several factors leading to the housing crisis in Poland, and the situation remains harsh. CBRE has noted that the reduced demand will hopefully lead to a decrease in prices, however, it must be noted that increasing construction costs will mean the prices will drop more slowly than normal. It is certainly an issue which will likely have knock-on effects for coming years, and something to certainly watch and evaluate closely.