At the end of the communist era, housing was a major social problem. Although the postwar era saw steady growth in housing quality and quantity, that growth fell far short of demand in both geographic distribution and total availability. In 1990 the disparity between available dwellings and number of households requiring housing was estimated at between 1.6 million and 1.8 million units. The causes of this enduring shortage were complex. They included the failures of the communist centralized approach to housing policy before 1989 and the economic downturns that occurred in the 1980s and after the reform era began in 1990.

Communist Housing Policy

As in most other economic and social areas, postwar Polish housing policy followed the Soviet model. The principle behind that model was that housing should be public property and a direct tool of the state's social policy. Accordingly, the Soviet model eliminated private ownership or construction of multifamily residential buildings. Except for single-family units, the government had the legal power to take over private houses and land required for building. Private construction firms were turned into state enterprises that did contract building for central state organizations. State housing policy disregarded supply and demand in favor of administrative space allocation norms, standardized design and construction practices, and central rent control. Maintaining rents at a very low level was supposed to ensure that housing was available to even the poorest citizens. However, housing policy was subordinate to the requirements of central economic planning, so resources for housing construction were directed to industrial areas critical to fulfilling plans and advancing state policy. Materials distribution for housing also was subject to delays or disruption caused by the urgency of other types of construction projects. Although rural and small-town housing nominally escaped direct control, materials rationing and deliberate state hindrance of private construction limited the availability of new housing in such areas.

Polish Housing in Practice

In practice the housing policy of Polish communist regimes was more pragmatic than the Soviet model. In some regions, high housing demand inspired locally controlled cooperatives that pooled state and private resources. State housing construction actually was halted in the 1960s to create demand for cooperative housing, for which rents were much higher. Thereafter, however, the cooperatives gradually became centralized national monopolies, and construction in the 1970s was dominated again by large state enterprises. The monopoly status of the builders and the cooperatives insulated those groups from market competition and enabled them to pass along the costs of inefficient operations to the tenant or to the state.

Under these conditions, housing construction was extremely wasteful and inefficient. The economic crisis of 1980 combined with existing weaknesses in industrial policy to begin a housing shortage that lasted through most of the decade. Between 1978 and 1988, annual housing completions dropped by nearly 45 percent, and investment in housing dropped by nearly 20 percent. At the same time, the Polish birth rate added pressure to the housing situation. By the late 1980s, the average waiting time to buy a house was projected at between fifteen and twenty years if construction continued at the same rate. The housing shortage was a primary cause of social unrest; however, the structural flaws of Polish building continued unchanged. Construction remained of low quality, builders maintained the monopoly control granted by centralized planning, labor productivity dropped, and distribution and transport remained centralized and inefficient.

Housing also remained subordinate to industrial goals. In the 1980s, this meant that new workplaces were the center of housing construction activity, which produced dormitories for workers. By 1988 Poland ranked last in Europe in housing with only 284 dwellings per 1,000 persons; 30 percent of Polish families did not have their own housing accommodations; and the average number of persons per dwelling was 20 percent above the European average. In addition, the average usable area per dwelling in Poland was 10 to 15 percent below the average for other socialist countries and 30 percent below the average for Western Europe.

Private housing revived somewhat in the 1980s, although independent cooperatives still faced critical materials shortages in the construction stage. An easing of tax regulations and other economic changes raised the profitability of private property in that period. In 1988 the percentage of housing construction projects in which individuals invested had risen to nearly 34 percent from its 1978 level of 26 percent. Although state investment also rose slightly in that period, both increases were at the expense of cooperative investment, which dropped by 10 percent. Nevertheless, in towns privately owned properties remained insignificant until 1989, mainly because high inflation in the 1980s devalued the long-term, low-interest loans offered on state property. In 1989 the new government's anti-inflation measures realigned such loans with present currency values and raised interest rates, stimulating conversion of two-thirds of cooperative flats into private property by early 1990. At the same time, the monopolistic Central Cooperatives Association was split into numerous genuine cooperatives, the state housing administration was abolished, and new incentives were introduced to stimulate private building and rentals.

Housing after 1989

In 1990 Poland's traditionally low rents rose drastically when government subsidies of fuel, electricity, and housing maintenance ended. The long-term goal of housing reform was to let rents rise to market levels. A housing benefits program was to help the poorest groups in society, and new rules were put in place for financing housing purchases. In the transitional period that followed the end of communist government, however, the gap between demand and supply grew. Rising rental and purchase prices, the new obstacles created for housing construction firms by competitive conditions, and the economic downturn that began in 1990 also contributed to this gap. To function efficiently, the housing industry also required more substantial investment in modern technology, particularly in chronically wasteful areas such as cement production and building assembly.

In 1989 and 1991, new housing legislation concentrated on privatizing the ownership of housing units. Of the 2.7 million cooperative apartments in Poland, 57 percent were still tenantoccupied rather than owner-occupied in 1991. An additional 1.5 million apartments were owned by enterprises, which continued the uneconomical communist system of subsidizing as much as 80 percent of the property upkeep for their tenant workers. Beginning in 1989, private owners of multifamily houses could receive subsidies for maintenance, for which they had paid in full under the old system. The 1991 legislation set financial and legal conditions under which renters of cooperative-owned and enterprise-owned housing could assume ownership, creating individual property units from the larger units formerly administered by a central agency.

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Source: U.S. Library of Congress