Monthly magazine of the Federation of NOT Scientific and Technical Associations

30th edition of the Golden Engineer poll

The Gordian knot of housing

From prof. Dr. hab. Maciej Cesarski of the Department of Social Policy at the Institute of Social Economy of the Economic and Social College at the Warsaw School of Economics is interviewed by Zygmunt Jazukiewicz.

Political conditions, social structure, governments are changing, and the housing problem in Poland is still alive. Mr. Professor has been involved for many years in, among other things. Housing in the broadest context. Perhaps this is the approach that is missing from housing policy?

I would like to point out that with my activity I try to refer to the reasoning referred to as the “Polish school of approaching housing and settlement issues,” developed since the 1920s, about which I wrote in a monograph (OW SGH, 2012). Thus, I think that reducing the housing problem in Poland to a problem specific to a country in the intermediate stage of development of capitalism after a drastic transformation is a superficial and sectional treatment of the issue. Leaving aside even the recent unprecedented years of pandemonium and aggression against Ukraine, it should not be forgotten that the housing problem, which I will call the issue, is a global, cumulative result of the market paradigm of economic growth that has been influencing since the industrial revolution. The destructive nature of this paradigm has only been threatening an ecological civilizational catastrophe for a few decades. Much earlier, however, it relegated social housing and settlement to a residual role.

This was also the case in Kornai’s scarcity economy in the so-called “shortage economy. Real socialism during the much-maligned push for economic growth in the face of the disappearance of market mechanisms. At the time, urban housing was a permanently inadequate “by-product” of this growth dependent on its variable – as in capitalism – pace.

If we look at the map of population migration in Poland, we can see that the inner cities of large cities stand out as a kind of “hole”: the balance of migration is small, while the largest of the existing ones are migrations to suburbs. The centers are transforming into deserted office, banking and retail complexes. How do you interpret this phenomenon?

The tendency to regress residence in the centers of large cities in favor of suburbs – despite the manifestations of reurbanization, gentrification, etc. is caused by market mechanisms that are not very controllable in the long term. I don’t see the global, civilizational upside of this process, nor the possibility of stopping it with the continuation of the growth paradigm in its current form. I know of only detached attempts to counter this process based on the use of half-measures with varying proportions of administrative (defying the logic of the market) and economic instruments, with ad hoc effects at best.

Spatial expansion of cities remains the crux of urbanization in the form of individuated housing that allows wealthier strata access to an attractive residential environment. This is ransomed by the shrinking of space with ecological values and public access to it due to demand for building lots, individual automobile transportation, increased energy consumption, etc. The sprawling suburbanization in this situation is a major factor in social and spatial segregation that goes far beyond the local scale.

The intensity of new construction is quite good. At the same time, we have a low birth rate, and previously many people emigrated. So why do we keep talking about a housing deficit of approx. 2 million?

The not inconsiderable performance of residential construction in recent years was based on the activity of developers and those investing in individual homes. The share of both forms in housing construction at 97-98% demonstrates the well-established marginalization of social housing in Poland. So here we have an important indication of the continuing significant housing deficit. In addition, the deepening structural crisis of capitalism, including the migration crisis, is cluttering population statistics, mainly through the unreliable recording of international migratory movements and the housing situation, the most significant determinant of which is self-occupied households. Yes it is the paradigm of market-driven economic growth that in the era of globalization reduces diagnostic and forecasting capabilities regarding, among other things, housing deficit estimates. The deficit is probably sizable, but I can’t justify whether it is 2 million housing units or less or more. The progressive compilation in the 2011 and 2021 National Population Censuses of current population and housing registries as background materials, with a shift away from physical censuses, deprives these investigations of their role as mainstays of estimates in this area. This is a manifestation of a general tendency, dangerous especially in times of crisis, to base national accounts on variables subject to the conjunctural influence of stream-type data while reducing the resource account, which would lend credibility to socio-economic structural analyses.

None of the state housing development programs to date, since the PR5 program in the 1980s. did not bring success. What is the reason for this?

The PR5 program of the lat. The 1980s and the relatively most successful one of the 1970s, financed by Western loans, were conducted in a scarcity economy, when housing did not play an economically active role constituting the aforementioned residual product of soon-fading economic growth. After 1989, the relatively socially oriented, but with too little in-kind effect, program financed after 1995 from the NFM was abolished in 2009 in the name of ad hoc budget savings. On the other hand, the promotion of property ownership of individuals belonging to or pretending to belong to the middle class has been served since 2001 by successive couple-year only programs based on subsidies from the state budget to mortgage interest rates, subsidizing from the budget the purchase of an apartment or house on the dependent market, and then regardless of household income, etc. The existing programs, including the NPM along with the abandoned “Housing Plus” were written into a market model favorable to developers and banks, with chaotic insufficient public intervention. Besides, other incipient or announced housing programs are also far from becoming an integral part of settlement policy relating to the broader inhabited space, which further makes their social relevance questionable. With today’s double-digit inflation, attempts to alleviate the housing crisis with loans are doubly irresponsible. The Polish housing market has become pathologically dependent on credit. Low interest rates and rising creditworthiness at the time increase the demand for housing, and consequently its prices. Crisis-era reductions in the supply of credit drastically reduce demand, petrify the market, and the cyclical nature of this type of dependency raises housing prices becoming unaffordable for larger and larger segments of the population. Similarly, contribution subsidies for first apartments increase demand and their price, not supply. This is because it prompts developers to wait rather than build. This has been the case for years, for example, in the UK, to whose market model of housing Poland is drifting, The structural, long-term impotence of the market-growth paradigm in solving housing problems is also manifested, for example, in the departure from the model of such consistent social housing policy in Vienna developed during the long years of rule by forces with a socialist orientation. Many other examples can be given here as well.

There are clearly two housing markets in Poland: the market of large cities and the market of small towns. High demand for the former drives prices. The second market limits the chances of good social standing, so it is not in demand. The result can only be one: the growth of big cities and the decline of small ones. Do you agree with this diagnosis?

Both market models, in large and small cities, preclude the long-term survival of multi-generational households, one attracting the younger generation to larger centers and the other pushing them out of smaller ones. This makes, in market realities, the state’s attempts to counter this doomed to failure. The activity of job-creating investors, usually in and around major cities, reinforces these mechanisms. Economic policy can tone them down with randomly mentioned half-measures in a very limited way, because the opportunities of provincial areas are determined by the ability of their socio-economic potential to bring profit, and the circle closes.

From the usual average for the country as a whole, the housing situation is not bad: basically one person per room. The public perception, however, is that housing is not developing. Why this paradox?

Note that the trend toward improvement in averaged measures of the housing situation in Poland is related to post-1989. with housing increasingly targeted mainly to the better-off population. Increased departures abroad of mainly young-aged Poles especially after Poland’s accession to the EU, the unknown scale and unknown nature of the returns, and the constricted reproduction of the native population relieve current housing needs, but reduce the possibility of improving the housing situation in the future. In Poland and other market economies, there will be a social improvement in the housing situation when the needs of the weaker sections of the population for decent housing are met.

In Polish conditions, reluctance to occupy rental housing definitely prevails. As a result, landlords are not making money from rent and are missing out on opportunities to enter the middle class that invests and grows the economy. How, in your opinion, can this be changed?

I don’t know if the prevailing attitude of apartment seekers in Poland can be called an unwillingness to rent. Rather, it is not cultural considerations, but lately the short-term uncertainty of even the socio-economic situation in Poland that makes the lease a kind of last resort, and for less affluent social groups a psychological and financial barrier. Apartment rentals, etc. confirm this rule. In a market economy, equilibrium, including in the rental housing market, does not exist. There are only differently intensified socio-economic ascending or descending dependencies manifested, for example, in depression or revival. Mass rental of apartments for moderate rent in Poland does not exist. It is possible to enter the middle class by renting at high rents, that is, primarily in the already mentioned large urban centers attractive to investors, and here again we have a closing circle of impossibility concerning, for example, the duration of multi-generational families.

Construction is adopting higher and higher technical standards, so it’s getting more expensive. “Cheap” homes are virtually impossible to build, in part because of EU directives. Is housing freedom nevertheless possible? Wouldn’t this threaten the emergence of slums?

I will emphasize that “housing freedom” as I know it is created by a free market subordinated to the game of supply and demand, a market that provides – sharpening – luxury real estate for the rich and excludes significant segments of society from the possibility of obtaining decent, after all, expensive housing, creating “temporary” slums, including in, for example, the aforementioned “statistically rich” UK. I would therefore divide the rising technical standards of housing into those dictated by the demand of the rich and their ostentatious “housing consumption” deceptively influencing the ideas of poorer people about the desirable way of living, and the standards necessary for dignified habitation taking into account the general progress of civilization and the cultural and climatic diversity of EU countries as well.

In conclusion, a comparison comes to mind between today’s experts engaged in fixing the market paradigm of economic growth, among other things to solve the housing and settlement issue, and the alchemists who remained at the service of the mighty, who for centuries searched unsuccessfully for a method to turn metals into gold. This “gold” today is downplayed because it contradicts the growth paradigm, but is necessary for the persistence of a settled civilization to root out habitation. This rooting , by shifting to a pro-housing and pro-settlement orientation of sustainable development, would reduce environmental pressures, including excessive settlement migrations exacerbated by global social inequalities. It would reduce the overflow of global capital and commodity flows in pursuit of profit. But that’s a topic for another occasion.

Thank you for the interview.

prof. dr. hab. Maciej Cesarski