Increasing house affordability in Poland

The topic of housing affordability in Poland is constantly present in the public space and in conversations in the privacy of Polish homes. What can be done, in addition to the measures already taken, to improve their affordability?

According to data from the Ministry of Development and Technology, the number of apartments per 1,000 residents has increased every year since 2013. During the same period, the number of people between the ages of 25 and 34 living with their parents increased from 43.5% to 53%. How do we explain the increasing number of housing units per 1,000 residents and decreasing affordability?

The actions of successive governments have focused on the supply side - facilitating the construction of new units. What is missing are efforts to better balance the geographic demand for housing and thereby improve its affordability. Nearly 12% - 1.8 million - of housing units in Poland are vacant. They are, however, often in other places than the aspiring citizens' own housing. As we know, three things are important in the real estate market: location, location and once again location.

The number of people willing to own their own apartment relative to the number of units in a given locality has changed significantly over the past decade, depending on the region. Only in 4 regions the number of residents increased between 2011 and 2021. The rest of the country was depopulating - in 2023, as many as 270 out of 314 counties saw their population fall! At the same time, the price of apartments is determined by the relatively small - compared to the overall stock of apartments - number of transactions. The value of apartments in Warsaw, for example, is determined not by the 1 million apartments available in the capital, but by the 2,000 units sold in a given month. A 10% increase in the number of Varsovians between 2011 and 2021, not balanced by a proportional increase in the number of apartments, thus results in a disproportionate increase in prices.

Despite a slight decline in population over the past 10 years, the number of households in Poland has increased by nearly a million. One reason for this is an increase by 1 million in the number of people living alone and an increase of nearly 400,000 in the number of childless couples. In consequence, the number of households wanting to own their own home is, in proportion to the population, higher than it would have been in the past. What can be done to improve the supply-demand balance on a structural level and increase housing affordability?

A significant part of internal migration is related to the labor market. Meanwhile, the change in the structure of employment (the shift from industry to the service sector) and the development of technology enable a portion of the workforce to work remotely. Empirical evidence was provided in 2020-2021, when nearly 10% of employees worked remotely. Introducing tax and legal incentives for a sustained and full transition to remote work could slow down and perhaps even reverse some of the above trends. Many internal migrants would choose to stay in their hometowns or move to one of the many beautiful and more affordable corners of Poland if it were possible to break the chain of employment and location.

The second solution is to turn the suburbs into a city today. Growing cities are absorbing new land step by step. The cost of the necessary public infrastructure will be much lower per capita if the suburbs already resemble a city - with high-density development - rather than a village or American suburb. The lack of a systemic approach is illustrated by the number of people per km2 in the two municipalities neighboring Warsaw - in Jablonna it is almost 20 times lower than in Legionowo.

The third element is support for mass public transportation, the reconstruction of the rail network, the construction of high-speed rail, and investment in broad public infrastructure (hospitals, schools, cultural centers) in counties that are regional centers. These three measures: legal and tax support for remote work; turning suburbanization into urbanization; investing in public infrastructure and mass public transportation can improve the availability and affordability of housing in Poland.

* Photo source: https://tustolica.pl/jablonna-ma-16-tys-mieszkancow_64235