House of cards

Considering the spiraling prices of land and flats, and fearing a breakdown of the market, developers have appealed to the country's decision makers to take steps to free up land for investment. "We appeal to the President, the Prime Minister and the Minister of Finance to rescue Polish housing construction," said the president of the Polish Association of Developer Companies (PZFD), Jarosław Szanajca.

Five years ago, a 60-sqm flat in one of Warsaw's most popular districts cost zł.200,000. Now, the same flat would cost some zł.300,000. "In the last 12 months the price of land increased by 60 percent, which translates into increasing flat prices," says the deputy president of PZFD, Marek Poddany. "This growth is a threat for all the participants of the market," he stresses. Fearing that soon customers will not afford flats, which might result in a drastic drop in demand and finally, in the bankruptcy of development companies, PZFD has put forward a program whose objective is to slow down price rises. "We have three main propositions that cost nothing," stresses Szanajca.

Since a lack of land is the main obstacle for developers, PZFD first of all calls for the amendment of the spatial development law. PZFD wants the decisions on building conditions, called WZZiT, to be issued on the basis of the studies of spatial development conditions, which most towns and other administrative units (gminas) have. The developers claim that this change could multiply the supply of land for investment. "We are able to build 200,000 a year, but we build only 100,000," complains Szanajca.

Another change that could contribute to price stabilization is enacting a law that would guarantee the seven-percent VAT rate for flats and houses, especially since the EU has already given Poland carte blanche on the issue. "The fear of the high [22-percent] VAT rate causes unnaturally increased demand and speculative purchase of flats," says Szanajca. Although the appropriate bill was actually publicly announced by the Minister of Construction without raising any objections, it somehow cannot reach the Parliament. "This is just one signature of the Finance Minister that could start off the legislation procedure."

Finally, developers are calling for the enactment of a new construction law. "The law is 12 years old and in this period it has been amended 30 times," points out the general director of PZFD, Jacek Bielecki. He claims that the proposed suggestions are ready. "Simplifying and shortening procedures, taking into account the economic calculation in the construction regulations and cutting down on the free interpretation of the law are the basic assumptions of the new law," says Bielecki.

How much the new law is needed can be illustrated by the fact that despite technological advancements, in the last two years the period of developing an investment has gotten longer by more than six months.