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Friday, June 14, 2024

Overcrowding of apartments. Poland has the worst result in Europe

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The squeeze on the rental market in Poland has increased by leaps and bounds. As a result, almost 2/3 of tenants live in an apartment that is too small, according to HREIT estimates based on Eurostat data for 2022. This is the worst result in Europe.

As much as 65 percent of Polish tenants live in an apartment that is too small, according to HREIT estimates based on data from the European Statistical Office for 2022. This is not only a much worse result than a year ago, but also the worst in Europe.

Percentage of tenants living in overcrowded housingHREiT/Eurostat

Overcrowded apartments. This is the biggest problem in Poland

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It is true that the European office is still compiling the data, but the data available today already summarize the situation of most countries. In addition, we already have results for EU countries where the housing situation of tenants has been the worst so far. Unfortunately, none of these countries in 2022 was as bad as ours.

Even on Latvia and in Slovakia, overcrowding among tenants is currently around 61 percent. – as much as in Poland in 2021. They are already occupying the next places in the ranking Bulgaria and Romania, where overcrowding of occupied apartments is 53-54 percent.

These are still not the results you can be happy about, but even such a situation has not been experienced by our tenants in the last dozen or so years. Eurostat data used by HREIT to estimate the percentage of tenants living in too small premises date back only to 2007.

And what is the situation of tenants in the richer countries of our continent? IN Germany 18 percent tenants live in too small an apartment. In France it is 20% and in Austria 26%. These results are even several times better than in Poland. The European leaders include: the Netherlands, Ireland and Spain. In these countries, only 7 to 13 percent tenants live in too small an apartment.

How is housing overcrowding measured?

Eurostat understands this as a situation where there are too few rooms available to a household. The norm should be that there is at least one room per household (implicitly living room) plus:

– one room (bedroom) for a couple forming a household, – one room (bedroom) for each single adult person, – one room (bedroom) for two children of the same sex aged 12 to 17, – one room (bedroom) ) for a person aged 12 to 17, if not included in the above points, – one room (bedroom) for two children under 12 years of age.

In other words – one room is de facto a base to which rooms are added if the household meets the requirements from the following points. By the way, this means that each studio apartment, in accordance with European standards, is overcrowded as long as at least one person lives in it, because apart from the living room, it does not have a separate bedroom at its disposal.

Difficult access to credit worsened the situation

So why is the situation on the rental market in Poland so bad? “In 2022, we had to deal with a combination of at least a few problems. The first and basic is the fact that there is a shortage of flats in Poland, and the ones that exist are small. Here we can blame our entire turbulent history along with the partitions and world wars. PRL, during which, admittedly, many apartments were built ‘under Gierek’, but small ones. Their standard often does not match those that Eurostat sets today as a minimum model “- we read in the HREIT analysis.

As it was added, the increase in overpopulation rates in 2022 alone is also the result of at least two shocks. The first was turning off the credit taps. This was due to rapid growth interest rates and supervisory regulations that have made access to credit even more difficult. The effect was that someone who would normally decide to buy their own “M” in 2022 often could not do it, because the banks would refuse him a loan or would like to grant it, but with a disturbingly high installment. The effect was that some would-be buyers were forced to lease.

HREIT experts also pointed out that Russia’s aggression against Ukraine resulted in a wave of refugees arriving in Poland, and some of them could afford to rent apartments. Effect? There was a shortage of flats. “April 2022 was particularly poor in this respect, when, according to Unirepo data, the number of unique offers of apartments for rent was about 40,000. This is about 3% of the existing stock of apartments for rent, while the result is at the level of 5% and less recognized It is too dramatic to buy an offer. We didn’t have to wait long for the effects. Rents skyrocketed. This is why some tenants were forced to look for offers of a lower standard and smaller area” – it was noted.

Will the government housing program change the situation?

Fortunately, market mechanisms have already started to work – a sharp increase in rental profitability has resulted in more offers of apartments for rent on the market. In 2023, the situation of tenants began to improve. The number of available offers has already increased to over 70,000, and rents, although slowly, have fallen slightly.

PiS and PO offer cheap housing loans, the Left criticizes these ideastvn24

According to experts, there is one more important change ahead of us that may change the image of the rental market in Poland. It is about the government’s cheap loans program, which will start operating on July 3 this year. As explained by the authors of the analysis, it should give tenants very strong arguments for converting the lease into ownership.

“The reason is simple – a preferential loan is to be very cheap and relatively easy to access – at least easier than a standard mortgage. Moreover, the installment of such a loan is to be lower than the rent. By how much? If we compare the loan installment and the rent rate, the difference is not will be diametrical, but from the accounting point of view, one should compare apples with apples, so not the total expense, but the costs.The point is that the loan installment consists of two parts – capital, which reduces our liability to the bank and builds our wealth, and the interest part, which is actually the bank’s remuneration for providing us with money for the purchase of an apartment. That is why, if we compare the amount of the rent paid and the interest part of the installment, it turns out that this solution is even 3 times cheaper than renting.

“For many tenants, the calculation will be very simple. If they have to choose between an apartment in an apartment that is too small and paying rent, they will probably choose a cheaper solution with ownership of the premises. This may significantly reduce the demand pressure on the rental market” – added.

Main photo source: Adobe Stock



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