Financing Housing Investments in Poland

The structure for financing housing investments in Poland has been developing since 1995. The birth of an open market economy followed the enormous social and economic breakthroughs of 1989, opened new possibilities, perspectives and most of all the freedom to make decisions. However, with this freedom came new responsibilities, including the need to raise finances to purchase a flat or house. At present, approximately 2 million families have no dwelling of their own and an additional 600,000-800,000 apartments should be demolished. On average, there are 3.188 persons per apartment in Poland, as against 2.2 in Germany, where apartmenta are much bigger and better equipped. These are only a few of the housing problems that Poland faces. It is necessary to remark that these housing needs do not necessarily correspond to demand. As many of those who lack housing also lack the necessary finances, one way to encourage demand would be to provide access to various financial instruments which would help people who currently rent or live with relatives become homeowners. The basic problem in Poland is that few people use mortgage loans to buy flats. In spite of an increase in the share of housing investments financed by banks from 9% in 1998 to 21.4% in 2001. So far, most bank loans are used for repairing or remodeling apartments. Nearly 66 % of housing loans are used for these purposes, while less than 22% of funds from bank loans are used to purchas or build homes. The majority of homes in Poland are still purchased with personal savings.