Should local governments and their municipal companies build housing? With large cities dominated by the real estate development sector and small towns by the individual sector, this question is still open. There is considerable value in public investment, the IRMiR report says.
Cities as housing investors — IRMiR's latest OBM report
© IRMiR Urban Policy Observatory
As part of our #ReportThursday series, we present documents, reports and guides on architecture, cities and local government that are certainly worth publicizing and promoting. This week we look at the report „Cities as Housing Investors,” compiled by Kamil Nowak and Alina Muzioł-Węcławowicz (IRMiR Urban Policy Observatory).
The question of the legitimacy of starting housing investments by local governments and their companies is still open in Poland — mainly by the really good performance of two sectors — real estate developers and individual developers. As indicated in the report, the annual target for the number of housing units completed was met each time between 2017 and 2021. The individual sector dominated in small cities, while large cities were primarily taken over by developers.
Compared to its European neighbors, Poland fares really well. In 2021, 6.2 apartments per 1,000 residents were built in Poland — at that time, more apartments were built only in France. However, the housing boom was mainly in metropolitan areas and centers with expanded tourist functions.
number of housing units completed per 1,000 residents in 2021
© IRMiR Urban Policy Observatory
At the same time, Nowak and Muzioł-Węcławowicz's report points to the emergence of a gap in the housing market concerning that part of society that cannot afford credit, or the cost of renting an apartment for a household can lead to a bad financial situation. The housing part does not meet the needs of society — the disturbed balance negatively affects not only individual choices, but also the economy.
types of approaches to conducting local housing policy
© IRMiR Urban Policy Observatory
Most cities, however, approach housing construction and rehabilitation with skepticism. As the report's authors point out — more than half of the cities surveyed did not build a single housing unit between 2017 and 2021. Many cities limit their activities to social and municipal housing, despite the emergence of financing tools and instruments today. As the report reads:
Housing policy doesn't have to target a narrow set of people. It turns out that it can be carried out with vigor and without generating losses.
How can cities step into the role of investor? The wide range of tools cited in the report, along with the listed success stories of some centers, show that a different housing policy is possible.
The report is available on the Urban Policy Observatory website.
housing investment in Poland
© IRMiR Urban Policy Observatory
how to start housing investments by local governments?
The Nowak and Muzioł-Węcławowicz report summarizes the structure of housing construction in Poland, but also shows how cities can start their investment programs. What did the report's recommendations indicate?
First and foremost, a proper survey of housing needs. It is difficult to determine whether it will be more important to build rental housing with access to ownership, strengthen commercial construction or a program of renovation without proper research. An example cited in the document is Dabrowa Gornicza, which launched a study, followed by an appropriate strategy.
categorization of housing types
© IRMiR Urban Policy Observatory
Adopting an appropriate method of data collection is also an important part of the study, as discussed more extensively in another IRMiR report, which we wrote about on Architekturaibiznes.pl. Without the right way to collect data, it is difficult to reform one's policies.
Housing investments should be tailored to the needs studied, through which we will learn whether we need more TBS with access to ownership, a rental housing base or commercial activities.Also important, according to the authors, is the link to other sectors, particularly in the case of medium-sized cities — which, through local housing programs, can encourage young people to return or stay. Among the recommendations is also the issue of education and modernization, as well as the identification of appropriate planning and implementation instruments.
planning and implementation instruments
© IRMiR Urban Policy Observatory
"but where does the money come from?"
Public discourse in Poland is dominated by the „myth of the cheap state” and the perpetual financial deficit — so when trying to build local housing policies, there are bound to be pessimists thundering about the lack of adequate economic facilities.
However, the report provides a list of financial tools that local governments and their companies are already using. These include the Surcharge Fund, the Thermomodernization and Renovation Fund, European Funds, the Government's Housing Development Fund, but also less popular forms of financing, from provincial institutions or through the FIZAN (Closed Investment Fund) Municipal Fund. Cities, can also issue special municipal bonds related to housing construction.
Instruments to support housing construction in Poland
© IRMiR Urban Policy Observatory
Raising these funds is possible not only for construction, but also for modernization and renovation. The report provides not only theoretical information, but also examples of cities that have begun to use these solutions. The report points to the diversified sources of financing used in Pleszew, the issuance of a housing bond in Zory, cooperation between local businesses in Karlino , or building a conscious strategy in the previously cited Dabrowa Gornicza.
An example of an investment implemented in Zory
© IRMiR Urban Policy Observatory
solutions "lie on the table"
Nowak and Muzioł-Węcławowicz's document shows, above all, that local government investment in housing does not have to be limited to the minimum, but can be a stimulant for growth and development of other branches of urban infrastructure. The development of housing resources is an opportunity for business, education, culture or the image of the city. Local government officials, who have so far thrown everything on the shoulders of the market and lack of resources, can look at these opportunities, using them in building a friendly environment for the "new bourgeoisie."
key dimensions of local government housing policy
© IRMiR Urban Policy Observatory
The report is available on the Urban Policy Observatory website.
