ABSTRACT

This paper provides a brief commentary on the demand for housing and the related

demand for mortgage credit.   No attempt to actually estimate the demand for credit or the

demand for housing has been made (in the first instance, the requisite data are not

available at present).  Rather, the purpose of this paper is to provide a discussion of the

types of housing models that are generally developed, the practical applications of these

models, and the types of data necessary to their estimation. 

The study has been prepared based on a request from a number of quarters,

including the Ministry of Finance (MOF) and the Foundation for Mortgage Credit.  It will,

hopefully, be useful to their efforts to understand the factors underlying the demand for

housing and the demand for mortgage credit, and the relationship among these and the

other asset and consumer goods choices facing Polish households.  Estimates of long 

term demand relationships, and their variance according to household characteristics,

should also be useful to the Housing and Urban Development Authority (HUDA) for

developing housing subsidy policies that best achieve their desired policy ends.  Finally,

our comments should also be useful to the Polish Banks Association (PBA) and individual

banks in order to assess what types of databases and methodologies are relevant to

forecasting the potential demand for mortgage credit.

Recommendations are then made for next steps in Poland.  The most important of

these is to develop a long term, ongoing survey: a  Survey for Housing and Consumer

Finance.   The survey would be conducted on a representative sample of households (the

sample could provide not only nationwide estimates but also individual estimates for

Poland's largest cities and/or other geographic areas, for example).  Microeconomic data

from this survey will be crucial to estimating the basic models for the demand for housing

and mortgage credit (and consumer credit as well).  Other recommendations include

developing modifications to the traditional models of the demand for housing and mortgage

credit relating to the barriers between potential and effective demand in Poland (and other

transition countries); developing a database of mortgage credit information based on

existing bank portfolios, linking household level data on loan characteristics and

household characteristics; and, in order to establish benchmarks for demand in Poland,

comparing key housing indicators from advanced emerging nations, such as Turkey and

Chile, and key housing finance statistics from Western European nations just recently

experiencing a surge in the demand for mortgage finance.

The study has been developed for USAID's Poland Housing Finance Project,

directed by Michael Lee.