Housing Reforms in Czechia and Poland

1. Housing market trends and policies in Czechia and Poland

Abstract

Czechia and Poland have experienced strong economic growth and significant improvements in living standards since the 1990s. Higher incomes and lower unemployment have put upward pressure on the demand for housing. This chapter provides insights on factors driving housing market trends in Czechia and Poland, such as demographic change, increasing incomes, and supply-side constraints. Additionally, the chapter details the state of play of housing-related policies in both countries.

Historical contexts in Czechia and Poland present similarities which continue to impact their current housing stock and policies. After the fall of the communist regimes, both countries rapidly privatised and opened a number of markets to competition, including the housing and construction sectors. Their mortgage markets gained momentum at the turn of the century, boosting investment in housing, until the 2008 global financial crisis, after which national markets experienced a significant downturn and economic stagnation. More recently, the COVID-19 pandemic and Russia’s war of aggression against Ukraine together contributed to an energy and cost-of-living crisis which has increased the pressure on their housing markets. These challenges have reinforced the need to strengthen investment in sustainable and affordable housing, while further developing housing solutions for vulnerable groups, which takes place in a broader process of the deinstitutionalisation of social services.

1.1. Comparative overview of housing markets and key housing challenges

Natural populations have been declining over the past decade in both countries. This decline has been partly offset by migration and demographic changes, like the increasing number of one-person households. Together with rising incomes and low unemployment, these trends have put pressure on housing demand, which was further fuelled by the arrival of Ukrainian refugees, a lot of whom settled in bigger Polish cities and in areas with a large Ukrainian diaspora and / or the potential for housing and employment. The quality of the existing housing stock has remained lower than in other EU countries despite efforts to finance renovations and improvements and housing supply has been limited, which has further fuelled the demand for new dwellings. This section highlights key housing markets trends in Czechia and Poland, showing some similarities as well as differences that requires specific policy directions outlined in Chapter 2 (Czechia) and Chapter 3 (Poland).

1.1.1. Despite demographic decline, rising incomes and low unemployment are putting pressure on the demand for housing

Both countries have seen their natural populations decline over the past decade (Figure 1.1, Panel A). The population of Czechia and Poland, similar to other Central and Eastern European countries, is ageing at a faster pace than that of their western European counterparts, which is in part due to lower fertility rates (OECD, 2023[1]) and the emigration of young workers, especially in Poland (IMF, 2019[2]). This negative natural population growth has been at least partially offset by migration inflows (Figure 1.1, Panel B). As a result, the total rate of crude population change has remained mostly positive since 2011 in Czechia. In Poland however, the rate of crude population change remained close to zero until 2019, and has even been decreasing since 2019, as Poland became one of the top departure countries within the EU (Koikkalainen, 2021[3]). The arrivals of Ukrainian refugees in 2022 led to a demographic spike in both countries in relative terms, putting renewed pressure on local housing markets, especially in bigger Polish cities.

Figure 1.1. Both countries have seen their natural population decline, which has been partly offset by migration inflows

Note: The crude rate of natural population change is computed as the difference between the number of deaths and the number of births in a given year, while the total population change takes migration into account.

Sources : Eurostat Population and population change statistics, EU-SILC (Eurostat).

Both countries have also seen their population age at a fast pace. Elderly people tend to be concentrated in cities in Poland, while they are primarily located in districts afar from major cities in Czechia (Figure 1.2). These differences have implications in terms of housing solutions for elderly people. While the development and renovation of dwellings to meet their needs in cities can rely on access to existing social and health services (e.g. care centres, hospitals, etc.), more significant and multi-dimensional investments in care services may be necessary in remote rural areas (EPRS, 2020[4]).

A significant increase in household income and a steady decline in unemployment have put pressures on the demand for housing in both countries since 2008. In Czechia individual incomes have increased faster than the EU and OECD averages since 2008 (Figure 1.3, Panel A), while unemployment has reached lower levels (Figure 1.3, Panel B). There are however important spatial inequalities in terms of living standards in both countries, as individuals with higher levels of education and income tend to concentrate in the more dynamic and growing urban centres, while less privileged households are more concentrated in rural regions with shrinking labour markets and low economic activity (Hegedüs, Horváth and Somogyi, 2017[5]).

Figure 1.2. There are more elderly people in some Polish cities and outside major cities in Czechia

Note: The data is displayed at the Eurostat NUTS3 regional level for Poland and at the district (Okres) level in Czechia, along with the name of the administrative capital cities.

Source: EU-SILC (Eurostat).

Figure 1.3. Households’ disposable incomes and employment increased over time

Note: The real gross disposable income of households per capita is calculated as the unadjusted gross disposable income of households and Non-Profit Institutions Serving Households (NPISH) divided by the price deflator (price index) of household final consumption expenditure and by the total resident population. The indicator is indexed with base year 2008.

Source: OECD National Accounts Statistics, Eurostat European sector accounts, OECD Employment Outlook.

In Poland, unemployment has indeed remained higher in the Lubelskie and Podkarpackie regions in the south-east, which border Ukraine, as well as in the northern part of the country (Figure 1.4, Panel A). In Czechia, the north-western (Severozápad) and eastern (Moravian-Silesian) regions also have higher rates than the rest of the country. Severe material and social deprivation is on average lower in both countries relative to the EU, at 2.1% in Czechia and 2.8% in Poland, against 6.7% for the EU in 2022 (Eurostat, Oct. 2023[6]). Living conditions are however also not homogeneous throughout the territory (Figure 1.4, Panel B). Households in Western Pomeranian and Pomeranian regions in Poland are more likely to face severe material and social deprivation than in the capital region of Warsaw, along with Kuyavian–Pomerania Lower Silesia residents.

In Czechia, the north-western (Severozápad) region has a larger share of households in a state of severe material and social deprivation. More disaggregated data shows that households in need of housing1 appear to be mostly located in the largest Czech cities (Prague, Brno and Ostrava) in absolute numbers, but the highest shares relative to the resident population are found in Ostrava, Chomutov and Příbram (Czech Ministry of Regional Development, 2021[7]) These disparities can have non-negligible implications on the countries’ housing policies, given the spatial concentration of vulnerable households facing difficulties to afford private-market housing.

Figure 1.4. Living standards are heterogeneous across regions

Note: The data is displayed at the Eurostat NUTS2 regional level along with the name of the administrative capital cities. The unemployment rate is computed for the working-age population (15 to 74 years old). Data on unemployment are not available for the Lubuskie region in Poland. The severe material and social deprivation rate is computed as the share of the population experiencing 7 deprivation items out of the 13 defined by Eurostat, including for instance facing payment arrears, the inability to keep the dwelling warm, etc. For more information, see: https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Glossary:Severe_material_and_social_deprivation_rate_(SMSD).

Source: EU-SILC (Eurostat).

1.1.2. Housing investment has remained low, generating only a small increase of the stock since the global financial crisis

On the supply side, investment in housing as a share of GDP declined sharply after the 2008 global financial crisis, recovering only after 2013 (Figure 1.5, Panel A). Investment in housing has historically remained low compared to the EU average, particularly in Poland, which has been linked to the privatisation of the housing and construction markets, and to the retrenchment of public funds since the 1990s. As both countries then entered a recession period, they did not attract the necessary private funds to finance new construction nor the maintenance of the building stock. Following the decrease in interest rates from the early 2000s to 2008, the demand for housing investment increased but was mitigated by rising house prices. These investments, albeit relatively low, have allowed a small but steady increase of the housing stock in both countries relative to their populations (Figure 1.5, Panel B). The total number of units per thousand inhabitants in Czechia has stayed close to the EU average since 1990, while it has remained roughly 20% below the EU average in Poland. More recently, construction costs have significantly increased due to the COVID-19 and energy crises, which has further constrained the development of new housing units: construction producer prices increased by 30% in Poland between Q1 2020 and Q2 2023 and by 27% in Czechia, above the EU average of 26% (Housing Europe Observatory, 2023[8]).

Figure 1.5. The number of dwellings increased despite low and stagnating investment in housing

Sources: Eurostat National Accounts, European Central Bank RESH Structural Housing Indicators.

Lagging investment has been an especially salient issue since both countries have historically had high occupancy rates: in the 2011 Eurostat census, unoccupied dwellings, defined as vacant or secondary residences, accounted for merely 2.5% of all conventional dwellings in Poland, while the share reached 13.7% in Czechia – both below the EU average of 15.8%. These shares have recently increased to 11.7% in Poland and 16.1% in Czechia according to the 2021 census.

However, these estimates are partly biased due to the COVID-19 context, as data was collected in Q2-Q3 2021 and some dwellings in large cities were vacant due to employees and students having to work and study remotely. Almost a third of these vacant dwellings were identified as frictional vacancies in Czechia, bringing the share of available vacant dwellings to 10% of the dwelling stock, and mostly located in areas where demand for housing was found to be low (Czech Ministry of Regional Development, 2021[9]). Additionally, the vacancy share had already decreased in 2022 in Poland, since part of these dwellings were used to house refugees from Ukraine (International Rescue Committee, 2023[10]). These vacancy rates seem therefore to indicate that the potential to increase the number of housing units on the market through the existing stock is limited. Vacant dwellings are unlikely to meet all the demand, since existing housing supply and demand tend to be spatially mismatched (European Commission, 2020[11]).

The number of building permits granted in both Czechia and Poland also dropped following the global financial crisis, recovering only after 2013 (Figure 1.6, Panel A). Both countries are however catching up at different pace. In Poland, the number of building permits has increased in absolute terms and in terms of square metres per inhabitants compared to 2005, while the Czech market has only returned to its pre-crisis levels (Figure 1.6, Panel B). Poland has been delivering relatively more permits than the EU average since 2008, although the trend has started to decrease since 2021 – similar to Czechia and the EU as a whole.

The number of buildings permits allocated might not provide a complete picture of the production of new dwellings, since obtaining a permit does not compel landowners nor developers to proceed with building. Moreover, since January 2022, landowners in Poland can build individual houses up to 70 square metres for their own use without a permit, hence the volume of building permits granted may not capture all new construction activities in Poland. The number of completed dwellings in Poland has, however, decreased from 238 490 units to 221 259 between 2022 and 2023 (Statistics Poland, March 2025[12]), representing a 7.2% decrease, which is in line with the trend displayed in Figure 1.6 (Panel A).

Figure 1.6. New construction has taken up again after 2013

Note: The number of residential building permits (panel A) is computed based on the number of permits delivered for residential buildings, excluding residences for communities.

Source: Eurostat short-term business statistics.

1.1.3. Most households own their dwellings and rental markets are underdeveloped, restricting housing options and mobility

Most households are owner-occupiers: 72% in Czechia and 84% in Poland in 2022, compared to 75% and 71% on average in the EU and the OECD, respectively (Figure 1.7). The Polish tenure distribution is largely a consequence of the privatisation of private housing during the transition out of communism. A number of households were given ownership of dwellings that were nationalised or built during the communist era and in public ownership, following re-privatisation laws passed 1996 in Poland – which also applied to the heirs of previous owners (Kozminski, 1997[13]). Re-privatisation laws were also adopted in Czechia in 1990, leading to the transmission of property rights to private households or cooperatives, which are further detailed in Chapter 2. Home ownership does not necessarily reflect households’ incomes nor living standards, as the quality of these dwellings can vary drastically.

While the size of the private rental sector in Czechia is close to the EU average, it has remained rather small in Poland (Figure 1.7), which could limit households’ mobility. The private rental market is much more developed in Czechia (22% of Czech households were renters in 2021, against 15% in Poland), and the rental sector appears to be shrinking in Poland (-3.5 percentage points between 2011 and 2021). In Czechia, the social (subsidised) rental housing stock2 is relatively small from a comparative perspective, accounting for 3.6% of all dwellings, while in Poland the share of social housing is around 6.6% (the EU* and OECD averages are 8% and 7.1%, respectively). In Poland, social housing is primarily provided by municipalities and municipal companies, including Social Housing Associations (TBS) and Social Housing Initiatives (SIM – see Box 3.3 in Chapter 3 for further details).

Figure 1.7. Most households are owner-occupiers

Note: Tenants renting at subsidised rent are lumped together with tenants renting at private rent in Australia, Austria, Canada, Chile, Colombia, Costa Rica, Denmark, Mexico, New Zealand, Türkiye and the United States. In Sweden, there is a large share of municipally-owned rental housing, which are included under Rent (private), because rent levels are not subsidised. See also indicator PH4.2 Social rental dwelling stock in the Affordable Housing Database for additional information on subsidised rental housing. Outright owners of homes are lumped together with owners with mortgages in Korea and Türkiye due to data limitations. Data for Australia, Korea, New Zealand Switzerland, United Kingdom and the United States refer to 2021, for Norway and Türkiye to 2020, for Canada to 2019, for Iceland to 2018. OECD and EU averages refer to countries for which all tenure types are available.

Source: OECD Affordable Housing Database (AHD).

1.1.4. House prices and rents have increased sharply, and many households are overburdened by housing costs

Real house prices and rents have increased at a sharp pace since 2013, following a fall after the global financial crisis, particularly in Czechia (Figure 1.8). Real house prices have been on an upward trend since the 1990s due to factors specific to Eastern and Central European countries: in addition to large-scale state ownership of the housing stock, rents used to be controlled and/or set by the state. These policies contributed to distort market prices and keep them at very low levels for a long time, which further fed their inflation in the aftermath of the transition.

Although real housing prices have increased everywhere, and more so in Czechia than in Poland, there are regional differences (Figure 1.9). In Czechia, the area surrounding Prague has experienced the lowest increase in prices from 2015 to 2021. In Poland, the area around Szczecin has seen the largest inflation in house prices as of 2021.

Figure 1.8. Housing prices have drastically increased in Czechia

Note: The real house price index (panel A) is derived from sales data on both newly built and existing dwellings. Rent prices are measured by the annual average index of the Harmonised Indices of Consumer Prices (HICP) for actual rentals for housing,

Source: OECD Economic Outlook (Analytical house prices indicators).

Figure 1.9. Real housing prices have increased faster in some regions

Note: Regions correspond to the NUTS3 regions defined by Eurostat.

Source: Authors’ computations from the Czech Statistical Office (CZSO) and Statistics Poland (GUS).

More generally, the recent increase of real house prices in the EU since 2015 has challenged housing affordability (Figure 1.10). Estimating the elasticity of new housing supply, i.e. the extent to which new housing can be made available in response to housing price increases, helps to assess how responsive new construction is to demand increases. When the housing supply is found to be inelastic, it indicates difficulties to build and make housing available in response to increased household demand. As a result, a rise in demand is likely to lead to a significant increase in real housing prices. If supply is elastic, however, other factors are likely to have had an influence on prices, leading to their current levels (see Glaeser, Gyourko and Saiz (2008[14]) for an overview of the mechanisms at play, and Cavalleri, Cournède and Özsöğüt (2019[15]) and Bétin and Ziemann (2019[16]) for recent estimations). In order to disentangle these effects, the elasticity of supply was estimated at the regional level in 12 countries for which data are available, including Poland and Czechia, following the estimation procedure detailed in Box 1.1. Identifying these effects can help inform the most appropriate policy directions to improve housing affordability.

Figure 1.10. Regional housing prices have strongly increased in Central European countries

Note: The light blue lines indicates the medians, the triangles indicate the means and the boxes measure the interquartile range (Q3-Q1). Outliers are not displayed. Real prices were derived from observed prices using the OECD housing price deflator.

Sources: OECD computations using data on regional housing prices from the Czech Statistical Office (CZSO), Statistics Poland(Gus), the National Bank of Slovakia, the French Public Finances Directorate General (DGFiP), Statistics Portugal, Statfin, Statbel, the European Central Bank and the OECD Analytical house price indicators.

Box 1.1. Estimating regional supply elasticities: method and data

Estimation strategy

Following Saiz (2010[17]), it is assumed that developers sell homes at price HP, which is the sum of land prices (LP) and construction costs (CC): $HP=LP+CC$. Further assuming the inverse supply elasticity of housing decreases with land availability, the inverse housing supply in each region can then be expressed as follows:

$\mathrm{\Delta }ln\left({HP}_i\right) ={\beta }_0+{\beta }_{CC}\mathrm{\Delta }ln\left({CC}_i\right) + {\beta }_1\mathrm{\Delta }ln\left({BP}_i\right)+{\beta }_2(1-{\mathrm{\Lambda }}_i)\mathrm{\Delta }ln\left({BP}_i\right)+u_i \left(1\right)$

The term $1-{\mathrm{\Lambda }}_i$ captures the share of unavailable land in region i and the number of building permits granted in the region (${BP}_i$) is used as a proxy for housing supply.

In order to deal with the endogeneity between house prices and construction, the price-elasticity of housing supply is estimated using 2SLS OLS regressions, similar to the empirical strategy used by Bétin and Ziemann (2019[16]). The first-stage regression is used to predict demographic change in each region i using four instruments (Bartik’s instrument (Bartik, 1991[18]), growth rate of the 0-14 populations 20 years before the estimation window, the evolution of burglaries two years prior and the evolution of completed dwellings):

$\mathrm{\Delta }ln\left({BP}_i\right)={\alpha }_{0+}{\alpha }_1{Bartik}_i+{\alpha }_2{POP<14}_i+{\alpha }_3{Burglaries}_i+{\alpha }_4{CD}_i+{\omega }_i \left(2\right)$

Predictions from equation (3) are used to estimate the reduced-form equation of inverse housing supply elasticity (2). Denoting $X_i^n$ the variables capturing constraints (geographical constraints, real wages, policies), the second-stage regression can be expressed as follows:

$\mathrm{\Delta }ln\left({HP}_i\right)={\beta }_0+{\beta }_{CC}\mathrm{\Delta }ln\left({CC}_i\right)+\left({\beta }_{BP}+\sum _n{\beta }_n{X}_i^n\right)\mathrm{\Delta }ln\left(\widehat{{BP}_i}\right)+v_i \left(3\right)$

Dataset

The regional elasticities of housing supply were estimated using a dataset containing regional-scale observations for 12 EU countries (NUTS-3 regions for Poland and Czechia), built by matching change in real house prices to geographical constraints, the evolution of building permits, policy indicators, wages and the change in construction costs for the period 2015-2021. The estimates derived from equation (3) were then used to compute regional elasticities of supply in each country. The volume of new construction is proxied by the number of building permits, and construction costs are measured with a synthetic index produced by Eurostat, which takes labour and material costs into account. Available land for housing development is accounted for using the size of the settlement area in Eurostat’s Land Use/Cover Area frame survey (LUCAS), which is a geodatabase with harmonised land-use and land-cover information for all member states. Note that the variable is built from land-cover in urban areas rather than entire regions, since geographical constraints would only restrict construction in densely built areas.

Since local policies impact housing supply, failing to account for differences in their stringency across countries would bias estimates due to unobserved heterogeneity. The estimations include two proxies for national policies with a potential impact on housing supply:

• The restrictiveness of land-use regulations can limit the land available for development. It is proxied with the index developed by Cavalleri, Cournède and Özsöğüt (2019[15]), which relies on the assumption that more decentralised governance of land-use policies leads to more restrictive regulations. It was adapted from the Wharton Residential Land Use Regulatory Index and computed using the answers to the 2019 OECD Questionnaire on Affordable and Social Housing, ranging from 0 (least restrictive) to 30 (most restrictive).

• Rent control stringency can also limit the supply of housing, since strong tenant rights can discourage the development of new rental dwellings. It was proxied by the Rental Market Index (ReMaIn), which is found in an open-source database compiling and quantifying rental legislations in 64 countries over time (Kholodilin, 2018[19]).

A more detailed data description is provided in Annex 1.A.

Table 1.1 displays the coefficients and robust standard errors obtained from estimating the inverse supply elasticity (Equation (3) in Box 1.1), with different levels of controls. Focusing on specifications (2) and (3), which address the endogeneity between housing prices and construction, the coefficients associated to construction costs are much higher than the one associated with demand (proxied by building permits), which is consistent with previous OECD estimates (see Tables 2 and 3 in Bétin and Ziemann (2019[16])). The coefficient attached to policy variables is also consistent with these previous results: land-use restrictions seem to significantly push up prices in response to a demand shock, meaning that they restrict supply, while the rent control restrictiveness index does not appear to have a significant effect on housing prices. In addition, real wages seem to have a strong limiting impact on housing supply, hence higher wages would tend to push housing prices up for a similar demand shock (e.g. through demographic increase). Using specification (3), inverse supply elasticities were obtained as ${\epsilon }_i ={\beta }_{BP}^l+ \sum _n{\beta }_n{X}_n^l$ where each coefficient ${\beta }_n$ is the coefficient associated with constraints $X_n^{}$ (geographical, policy-induced and wages). The resulting elasticities are displayed in Figure 1.11, and their range is in line with the results obtained by Bétin and Ziemann (2019[16]) despite using different methodologies, with higher values for Portugal, Sweden and the Netherlands than in other EU countries.

Table 1.1. Coefficients from the estimation of inverse housing supply elasticities

	∆ Housing Prices
	(1)	(2)	(3)
∆Construction cost	2.890***	2.283***	3.869***
	(0.302)	(0.731)	(0.180)
∆Building permits	0.141***	0.189***	0.179***
	(0.021)	(0.045)	(0.046)
∆Building permits x Rent control			-1.086
			(0.715)
∆Building permits x Land-use restrictiveness proxy			0.046**
			(0.022)
∆Building permits x Settlement area			-0.007***
			(0.002)
∆Building permits x ∆Real wages			1.270***
			(0.358)
Rent control			0.732
			(0.526)
Land-use restrictiveness proxy			-0.019
			(0.014)
Settlement area			-0.006***
			(0.001)
∆Real wages			0.425
			(0.338)
2SLS	No	Yes	Yes
Observations	125	125	125
R-squared	0.33
Centered R-squared		0.04	0.38

Note: Standard errors in parentheses. *** p<0.01, ** p<0.05, * p<0.1. Constants were included but not displayed in the table. Robust standard errors were clustered based on countries’ legal origin group, meaning they are robust to both unobserved heteroskedasticity and unobserved intra-group correlation. Building permits are instrumented by the Bartik instrument, the growth rate of population aged 0-14 between 1995 and 2001, the evolution of the crime rate (number of burglaries) between 2013 and 2015, and the evolution of completed dwellings.

Overall, housing supply appears somewhat elastic to demand shocks, since almost all regional estimates are above 1, but are rather low – in particular, the median elasticities in Czechia and Poland are 1.4 and 1.3 respectively (Figure 1.11). These results indicate that supply seems to react to demand shocks, but much less so than in other European countries. Increasing construction costs and real wages seem to have played a larger role, as well as restrictive land-use governance, in contributing to an increase in house prices. In other words, despite housing production keeping up with demand, real prices still increased sharply. In the Czech context, Šustek and Zlapetalova (2023[20]) found that more than half the inflation of real housing prices between 2013 and 2021 could be linked to the growth of real household incomes, which is consistent with the results presented here. Similar conclusions were drawn in the Polish context (Cellmer, Beata Cichulska and Bełej, 2021[21]). Both papers additionally suggested that favorable mortgage conditions, which are not included in this estimation, have played a significant part in rising housing prices, by increasing the number of potential buyers. Additionally, using building permits to proxy production in the construction sector does not control for the size and quality of new dwellings, which may also have improved and contributed to the price increase.

Figure 1.11. Regional housing supply was elastic in a selection of EU countries

Note: The light blue lines indicates the medians, the triangles indicate the means and the boxes measure the interquartile range (Q3-Q1). Outliers are not displayed. Supply elasticities were computed using estimation results from specification (3) in Table 1.1, from which inverse-supply elasticities are obtained using ${\epsilon }_i ={\beta }_{BP}^l+ \sum _n{\beta }_n{X}_n^l$.

House prices have also become increasingly high relative to the annual rent prices in Czechia (Figure 1.12, Panel A). This was largely driven by rising house prices, which were not fully compensated by the increase of disposable incomes (Figure 1.12, Panel B). In Czechia, the house-price-to-income ratio has become especially high, exceeding the Euro area and the OECD averages, reflecting the decreasing affordability of houses and potential barriers to home ownership in the future.

Figure 1.12. Owning a house has become less affordable in Czechia

Note: The price-to-rent ratio corresponds to median house prices divided by rent price indices. The price to income ratio is the nominal house price index divided by the nominal disposable income per head.

Source: OECD Economic Outlook (Analytical house prices indicators).

Consequently, and despite experiencing faster income growth, Czech households face a relatively higher housing cost burden than households in other EU countries (Figure 1.13). These housing expenses include the cost of rents and mortgage payments, land-based and property taxes, maintenance, and utility costs such as water and energy. Czech households spent on average 18.9% of their incomes on housing costs in 2022, compared to 16.4% in Poland.

Figure 1.13. The cost burden of housing is higher in Czechia relative to Poland and EU peers

Note: The housing cost burden is defined as the share of households’ disposable incomes being spent on housing costs, which include rents, mortgages, land-based and property taxes, energy and water expenses, and maintenance costs.

Source: OECD National Accounts Statistics.

Homelessness, which is the most extreme form of social exclusion, is a challenge in both Czechia and Poland. According to national homelessness statistics, which are difficult to compare across countries (see, for instance, OECD (2024[22]; 2020[23])), 104 818 individuals were experiencing homelessness in Czechia (0.97% of population) in 20223 (OECD, 2024[24]) and 31 042 people in Poland (0.08% of the total population) in 2024 according to the Polish Ministry of Family, Labour and Social Policy (2024[25]). These figures exclude people in institutional settings in Czechia, and people experiencing homelessness staying with family or friends in Poland. In both countries, most individuals experiencing homelessness are men, who accounted for at least 80% of rough sleepers in Czechia in 2020 (FEANTSA, 2020[26]) and approximately 80% of all people experiencing homelessness in Poland (Polish Ministry of Family, Labour and Social Policy, 2024[25]). In Czechia, single mothers at risk of losing their homes have become a priority target group of policymakers, as 37% of children enrolled in school were found to live in households at risk of eviction.

In Poland, the duration of homelessness has been increasing, as the share of people experiencing homelessness for more than 5 years rose from 43% in 2013 to 55% in 2019 (FEANTSA, 2020[27]). This suggests challenges to rapid intervention and the ability to provide durable housing solutions. Housing First initiatives, which provide long-term housing solutions to people experiencing homelessness, coupled with tailored support services, have been undertaken locally but are still not a general practice. These issues in the context of Poland are discussed further in Chapter 3.

More recently, the substantial increase in Ukrainian refugees fleeing Russia’s war of aggression in Ukraine has put further pressure on the housing market in both countries and increased the demand for affordable housing and emergency housing services at the municipal level. As of Q1 2025, 398 595 and 998 070 refugees had settled in Czechia and Poland, respectively, which represented 66% of refugees currently living in countries featured in the EU’s Refugee Response Plan according to the United Nations High Commissioner for Refugees (UNHRC, April 2025[28]). Following the EU directive, refugees are eligible to the same public services as Czech and Polish citizens, including social housing. Many municipalities have been in the first line to welcome refugees, sometimes despite limited resources. For instance, in the Polish city of Lublin, the municipality used public buildings listed in the contingency plans for natural disasters (e.g. schools, sports halls, university buildings and dormitories) to provide shelter to Ukrainian refugees. The temporary nature of these housing solutions has raised growing concerns regarding the sustainability of refugees’ living conditions in the long run (International Rescue Committee, 2023[10]); the Temporary Protection Directive was extended to 4 March 2026.

1.1.5. The quality of the housing stock is low despite efforts to finance renovations and improvements

The existing housing stock in both countries is not recent and is on average of relatively lower quality in Poland than in the rest of the EU (Eurofound, 2016[29]). Similar to other European countries, over 40% of existing dwellings were built between 1946 and 1989 (56% in Czechia and 43% in Poland per Figure 1.14), initially designed with little to no thermal insulation, and central heating systems that have since deteriorated. More generally, in the absence of renovations, dwellings built before the 2002 European Energy Performance Directive typically have lower energy standards, meaning households need to consume more energy to reach a decent level of comfort. Poland has made efforts to intensify construction since the early 2000s (Republic of Poland, 2022[30]) and replace or renovate these older residential buildings: 24.5% of its building stock was composed of buildings built after 2000 according to the 2021 census, against 17.4% in Czechia – for reference, 2011 census data estimated this share at 9.8% in the EU. The Czech housing stock has also substantially improved over the past two decades, in a large part through renovations subsidised by state programmes (see, for instance, the PANEL programme discussed in section 1.2 in this chapter).

There are also differences in terms of dwelling types. Flats in multi-apartment buildings are slightly more prevalent in Czechia relative to the EU average, while Poland is slightly below the EU average (Figure 1.15). In particular, there are relatively more flats in rural and suburban areas in Czechia than in the rest of the EU. Apartment buildings were the most common type of housing built during the communist era, with two-thirds of these multi-housing units located in panel blocks, which were typically developed to boost local economic development by allowing workers to move in (Building for the future, 2018[31]).

Figure 1.14. Dwellings are relatively older in Czechia than in Poland and on average in the EU

Source : Eurostat census (2011) – see Eurostat (2018[32]).

Figure 1.15. Flats are more prevalent on the Czech market

Note: Flats refer to housing units in multi-apartment buildings. Information at the EU level is from 2023.

Source: EU-SILC (Eurostat).

The quality of housing was at its lowest in the 1990s, as the mass-produced prefabricated housing blocks during the communist era aged and suffered from generalised under-investment in their maintenance. The bulk of the housing stock built before the 1990s has remained either public ownership or owned by cooperatives, leaving mainly municipalities in charge of the associated maintenance in Poland (Hegedüs, Horváth and Somogyi, 2017[5]). Over time, housing quality has increased, through renovations and higher standards for new construction: the share of households living in substandard housing was divided by 1.7 in Czechia and by 3.5 in Poland between 2010 and 2023 (Figure 1.16, Panel A). However, despite a marked decline in the share of households living in overcrowded conditions, the Polish overcrowding rate was still twice the EU average in 2024 (Figure 1.16, Panel B).

Figure 1.16. Housing quality is lower in Poland, but has improved over the last decade

Note: The overcrowding rate is the share of households living in an overcrowded dwelling, meaning there are not enough rooms to ensure one room per couple, for each person older than 18, etc. Substandard housing refers to dwellings with a leaking roof, damp walls, floors or foundation, or rot in window frames or floor. The risk of poverty threshold is set at 60% of the median equivalised income.

Source: Eurostat (EU-SILC).

Improving dwellings’ energy efficiency is a key element of EU countries’ national initiatives to subsidise residential renovations, in line with the European Green Deal. Households still accounted for 29% and 26% of final energy consumption in Poland and Czechia in 2021, against 28% in the EU, and followed different evolutions over time (Figure 1.17). In Poland, the improvement of dwellings’ energy efficiency of dwellings since the mid-90s was driven by state subsidies for insulation and boiler replacements. With solid fossil fuels accounting for 22% of fuels used for the final energy consumption of the Polish residential sector against 3% in the EU (Eurostat, 2023[33]), replacing these heating systems not only improves dwellings’ energy efficiency, but also positively impacts people’s health.

Figure 1.17. Dwellings’ share of final energy consumption remains above the EU average

Note: Residential energy consumption refers to the final use of energy by households, measured in Gigawatt-hour, and expressed here as a share of the total final energy consumption. Average consumption was obtained by dividing the final use of energy by households by the total population and expressed in thousand Gigawatt per hour.

Source: Eurostat Energy statistics and “Demography, population stock and balance” database.

1.2. Comparative overview of housing policies and challenges

Responsibility for housing-related policies is distributed across several ministries in both countries, as is widely the case in OECD and EU countries. The Ministry of Economic Development and Technology (Ministerstwo Rozwoju i Technologii) oversees the main housing policies and subsidies in Poland4, while they are the responsibility of the Ministry of Regional Development (Ministerstvo pro místní rozvoj České republiky) in Czechia. The responsibility for the social services provided in the context of supported housing lies with the Ministry of Labour and Social Affairs (Ministerstvo práce a sociálních věcí České republiky) in Czechia, and the Ministry of Family, Labour and Social Policy (Ministerstwo Rodziny, Pracy i Polityki Społecznej) in Poland, specifically the Office of Social Welfare Services in the Department of Social Assistance and Integration5. Other national ministries are involved in specific areas related to housing: for instance, both countries rely on their respective Ministry of Environment to establish a framework for energy renovations and distribute targeted support in the forms of grants and soft loans.

1.2.1. Construction, ownership and rental policies

Under their national housing policies, Czechia and Poland have established regulations and programmes to regulate the development of new dwellings and facilitate access to housing, both in terms of accessing home ownership and rent affordability (Table 1.2). Both countries regulate new construction through a building code established and updated nationally by the ministries in charge of the overall housing policies, which sets baseline standards in terms of resident security, materials, energy use and environmental impact. Local authorities oversee the delivery of building permits following their local urban development plans.

Access to home ownership has historically been subsidised or incentivised through fiscal measures in both countries, which are widespread practices in many OECD and EU countries. In Poland, households can obtain fiscal deductions and favourable loans to purchase their homes and apply for complementary grants depending on their incomes and family situations – a similar programme existed in Czechia but has been revoked since 2022. Young families are the priority target of programmes promoting homeownership in Poland, but government housing programmes more generally apply to low and middle-income households, who are not eligible for social housing, but cannot afford to buy property, nor to rent at a private-market rent. The Polish government has also attempted to facilitate new constructions by alleviating formal building permit requirements for houses smaller than 70 square metres.

Tenant rights are particularly strong in Poland and most renters have indefinite contracts, while most Czech renters tend to have contracts with a defined rental period that can be renewed. A recent reform of the tenancy law in Poland created “institutional leases” (najem instytucjonalny) to incentivise private developers to invest the construction of new rental housing units by contractually facilitating potential tenants’ eviction – but take-up has not been large so far. In Czechia, tenants can benefit from subsidies to cover housing costs. Similar subsidies are provided to certain groups of Polish renters depending on their income, family size, disability status, etc. In both cases, the level of spending on housing allowances is substantially lower than in the rest of the OECD, which could be partially due to a part of eligible individuals not applying for support.

Table 1.2. Main institutions and programmes related to housing construction, tenancy and ownership

Czechia		Poland
Main institutions and responsibilities	Main programmes or activities	Main institutions and responsibilities	Main programmes or activities
Framework for new construction and property ownership
The Ministry of Regional Development establishes national housing policy objectives and coordinates the different programmes.	The Ministry defines and updates the Building Act regulating spatial planning and construction issues in terms of safety, quality and contracts, along with the Administrative Procedure Act, the Expropriation Act and the Act to facilitate the construction of strategic infrastructure.	The Ministry of Economic Development and Technology establishes national housing policy objectives and coordinates the related programmes.	The Ministry defines and updates the Construction Law regulating construction issues and defining norms in terms of quality and in charge of the State Purchasing Policy regulating public procurement contracts.
			Under the 2021 Home without formalities Programme (“dom bez formalności”), houses up to 70 sq. metres can be built without a permit.
Local building offices implement the national guidelines.	Local building offices have a delegated competence to deliver building permits (conditional on environmental assessment of the impact of the project).	The heads of regional authorities (voivodeships) or county authorities (powiats) implement national guidelines	The powiat issues buildings permits but can be countered by the voivodeship – which is the first-level authority when it comes to large-scale projects (e.g. wind farms).
The Ministry of Finance defines and collects housing related taxes.	Collecting real estate taxes (and real estate purchasing taxes until 2020) and defining their level using an area-based approach.	The Ministry of Finance defines and the cap for housing related taxes.	Defining the maximum level of real estate and real estate purchasing taxes and defining their level using an area-based approach.
Local governments establish the level of real-estate taxes.	Defining and collecting real-estate taxes.	Local governments establish the level of real-estate taxes.	Defining and collecting real-estate taxes.
Access to homeownership
The Ministry of Finance provides tax-relief for first-time buyers.	Households can obtain a tax relief for the interest from mortgage payments (Nezdanitelná část základu daně).	The Ministry of Economic Development and Technology provides funds to support first-time homeowners using the state budget.	Under the First Home Programme, the Safe Mortgage Scheme, ensuring mortgage a fixed 2% interest rate for the first 10 years (up to PLN 500 000 for a single person, 600 000 for a family) and the Home savings account provides a state bonus to households’ savings dedicated to purchasing a home.
		The National Development Bank (BGK) provides guarantees for first-time buyers.	The Apartment without own contribution programme subsidises first-time owners’ downpayment. The BGK also operates the First Home Programme.
		The Ministry of Finance provides tax-relief on mortgage and home loans.	Mortgage and home loan interests can be deducted from households’ taxable income up to a threshold if the loan was taken out between 2002 and 2006.

 

Tenancy regulations
The Ministry of Regional Development oversees the framework for rental contracts.	Tenancy protection is included in the Civil Code (Contract Law – Rental Agreement). Tenants and landlords can agree on a contract period or sign an indefinite period contract.	The Ministry of Economic Development and Technology oversees the framework for rental contracts	The current Act on the Protection of Tenants’ Rights defines three types of rental agreements with different levels of protection: the civil law contract (strong tenant protection), occasional tenancy agreements (with an end date) and institutional rents (low tenant protection).
Housing affordability for renters
The Civil Code establishes caps for rent increases on the free market (up to 20% increase over three years).		The general law defines maximum annual rent increases and the conditions for the rent increases in the private market.
		Heads of Voivodeships establish the maximum level of rents for municipal housing, and municipalities or organization managing municipal housing establish the precise level.	Social housing rents are determined consistently with local municipal housing plans.
The Ministry of Labour and Social Affairs allocates rent subsidies to people struggling to afford housing, conditional on disposable income and housing costs (extends to owner-occupiers).	Households can apply for the Housing allowance (příspěvek na bydlení) and obtain the difference between the cost of housing and 30% of their threshold income. Households with a very low income can also obtain a Housing supplement (Doplatek na bydlení) to cover remaining expenses, and apply for a grant to cover their security deposit (mimořádná okamžitá pomoc).	The Ministry of Economic Development and Technology regulates subsidies to households and funds the programmes operated by the BGK.	Housing subsidies granted by municipalities are regulated by the Ministry of Economic Development and Technology. Allowances are available independently of tenure, but depending on income per family member, the size of the dwelling (households have to occupy a “standard flats” , capped at 35 sq. metres for a one person household for instance).
		The National Development Bank (BGK) supports municipalities develop affordable housing solutions and helps households cover their housing expenses.	The Flat for Start (Mieszkanie na start) programme implemented since 2018 grants financial support to households during their first years of renting, in collaboration with municipal housing.

Note: Czechia has three defined levels of government: the national government, 14 regions (kraje) and 6258 municipalities (obce). Poland has four defined levels of government: the national government, the 16 voivodeships acting as regional governments, 314 counties (powiats) and 66 cities with powiat status acting as intermediate government and 2477 municipalities (gminas), which are local governments. The list of policies is not exhaustive and may exclude local initiatives and punctual interventions.

Source: Government of Czechia, Government of the Republic of Poland.

1.2.2. Policies to support social and affordable housing, and associated social services

Social housing (below market-rate rental housing) is mostly provided by municipalities in Czechia and Poland (Table 1.2). The lack of affordable rental housing solutions is a shared issue, which has led to the implementation of dedicated programmes to increase the supply in both countries. Despite these programmes, the provision of social and supported housing is insufficient to meet demand. Municipal and publicly owned dwellings represent a particularly small share of the housing stock in Czechia, accounting for 3.6% of all dwellings against 6.6% in Poland in 2021. Further, Czech municipal dwellings are not necessarily offered below market rates, meaning that only a portion of these housing units ultimately serves the purpose of social housing per the OECD definition.

Due to the insufficient provision of social and affordable dwellings, eligible households can stay on waiting lists for a long time in both countries. The median waiting time for eligible households in Czechia was estimated to be two years and reached over 60 months in 18% of the surveyed municipalities in the OECD-MMR housing survey. In Poland, a study conducted by the Institute of Urban and Regional Development (2023[34]) also found a large under-supply of social housing, as 136 200 households were on waiting lists for municipal dwellings despite meeting eligibility requirements in 2020 – recent estimates provided by the Polish national Statistics Office (GUS) found 119 338 households on waiting lists for municipal dwellings in 2024, meaning a 12% decrease. Waiting times for eligible households were also found to be long, which is a consequence of the overall low provision of municipal housing and the lack of fluidity within the stock, due in part to the impossibility to take the evolution of tenants’ incomes into account for leases contracted before 2019.

In addition to rising construction costs, access to developable land is another significant barrier to expanding the supply of social and affordable housing. Further, even if financial aid is available to municipalities to develop new social housing units, there is limited support to cover maintenance costs, leading municipalities to sell part of their stock at a discount price, rather than shoulder the costs of maintaining it. The under-provision of social housing relative to demand in both countries is also due to the unaffordability of the private rental market, which is inaccessible to many low- and middle-income households.

In Czechia, the development of affordable rental housing units and housing for vulnerable groups is supported by the “Housing for Life” initiative introduced by the Ministry of Regional Development. The initiative is meant to tackle three priority objectives:

• The Affordable Rental Housing Programme of the State Investment Support Fund (Státní fond podpory investic – SFPI) launched in July 2024, which has served as a basis for similar programmes introduced by the National Development Bank (Národní Rozvojová Banka – NRB) as discussed below.

• The introduction of support for people experiencing homelessness, or at risk of experiencing homelessness, which was defined in the Housing Support Act (Zákon o podpoře bydlení) approved by the Chamber of Deputies in April 2025 and expected to be enacted by mid-year 2026, following approval by the Senate. This support will come in the form of contact points for people with acute housing needs, as well as rental intermediation mechanisms (Garantované bydlení) to incentivise private landlords and municipalities to rent their dwellings to people with very low incomes (e.g. less than 1.43 times the subsistence level) in exchange for public guarantees and financial support.

• The development of not-for-profit or limited-profit affordable housing providers.

There is, however, no universal legal definition of social and affordable housing in Czechia that would create a compulsory legal basis for all support schemes and providers. The only legal concepts for social and affordable housing in Czechia are currently found in the eligibility conditions for financing schemes: the funds from the EU’s Integrated Regional Operational Programme (IROP) can only be used to develop social rental dwellings per the programme’s definition, and the State Investment Support Fund (SFPI) has introduced a definition of affordable rental dwellings since July 2024 to grant development support, which has been used in a similar scheme for larger development projects by the National Development Bank since April 2025 (see Table 1.3 below and Box 2.3 in Chapter 2 for further details).

In Poland, social housing and supported housing are legally defined concepts and cover a range of housing solutions. As summarised in Box 3.3 and overall in Chapter 3, this includes, for instance, housing with more intensive integrated care support, such as training and supported housing for vulnerable groups (e.g. people transitioning out of foster care, people with disabilities or people experiencing homelessness), as well as municipal housing for low-income and vulnerable households with less intensive support needs. These housing solutions are mainly provided by municipalities, while NGOs, social enterprises, social cooperatives provide social support services through supported housing programmes. Municipal housing units are mostly low-quality panel blocks and/or older buildings constructed before 1945, which are costly to maintain and renovate. Maximum eligibility thresholds in terms of income vary from one municipality to the other but are very low overall. In the case of the municipal housing stock, social rents are set by the local government at very low rates, which often does not allow municipalities to cover the maintenance costs. When social housing is provided by municipal companies, they can set their own rates.

The main sources of support for the development of social and supported housing in Poland are the National Real Estate Resource (KZN), which can provide state-owned land, and the National Development Bank (BGK), which can cover up to 80% the building costs through loans and subsidies, while not-for-profit actors may cover the remaining costs (see Box 3.4 in Chapter 3 for further details). The Polish Development Fund and the BGK can grant additional support for social housing providers through soft loans. Since 2017, a budget of PLN 2.1 billion (approximatively EUR 491 million) has been allocated by the European Investment Bank, through the European Fund for Strategic Investments, and the BGK to expand support municipal social housing, through the construction and renovation of rental units to close the financing gap.

In addition, both countries have established specific programmes to finance supported housing for vulnerable groups. For instance, Czechia’s Housing First Programme and the Poland’s Overcome Homelessness programme dedicate national funds to support municipalities and NGOs developing housing units for people experiencing homelessness – these funds have however remained very limited in Czechia and have only been available for a few pilot cities. Similarly, both countries have programmes in place to fund the retrofit or construction of housing for older people and people with disabilities, which can be obtained by municipalities, NGOs and households themselves.

Table 1.3. Main institutions and programmes related to social, affordable and supported housing

Czechia		Poland
Main institutions and responsibilities	Main programmes or activities	Main institutions and responsibilities	Main programmes or activities
Provision, management, maintenance and construction of social and supported housing
Municipalities are in charge of the construction, management and maintenance of municipal and social housing.	Reviewing applications for social and supported housing and planning the construction of new units.	Municipalities (sometimes together with local NGOs or social housing companies) are in charge of the construction, management and maintenance of social and supported housing.	Reviewing applications for supported and training housing and planning the construction of new units.
Financing affordable housing
The State Investment Support Fund (SFPI) provides subsidized loans and grants to municipalities and not-for-profit organisations for the construction of affordable rental housing	The Affordable Rental Housing Programme of the SFPI, introduced in 2024, provides grants (covering 25-40% of total costs, depending on quality criteria) and subsidized 20-to-30-year loans to cover up to 90% of the total investment costs to build affordable rental dwellings (cost-based rent or up to 90 % of the market rental). The programme targets investments of EUR 10 million and less and is funded through the EU Recovery and Resilience Facility. (see also section 2.1.1 in Chapter 2).	The publicly owned National Real Estate Resource (KZN) manages real estate/properties included in its reserve.	Creating Social Housing Initiatives (SIM) and supporting Social Housing Associations (TBS) together with municipalities to develop of new dwellings with moderate rents.
The National Development Bank (NRB) provides subsidized loans for the construction of affordable rental housing.	The Affordable Rental Housing Programme of the NRB, introduced in April 2025, provides junior subsidized loans for up to 80% of eligible investment costs for the construction of affordable rental dwellings (cost-based rent or up to 90 % of the market rental). The remaining investment costs need to be financed with private equity (minimum 10% of investment costs) and a commercial loan (minimum 10% of investment costs). The programme targets investments above EUR 10 million and is funded through the EU Recovery and Resilience Facility. The NRB is also setting up a EUR 80M fund cofinanced by the NRB (EUR 40M) and private investors to purchase dwellings on the market to be rented out at an affordable rent. The fund is expected to be operational in 2026.	The National Development Bank (BGK) and the Subsidies Fund (financed from the state budget within the scope of the Ministry of Technology Development) finance the construction of social housing units.	Through the Social Rental Housing Support Programme (SBC), the National Development Bank (BGK) grants loans to social housing associations, housing co-operatives and municipal companies to support the development of new dwellings with moderate rents for households with average income but not able to access property or rent on the private markets, with the Subsidies Fund covering the BGK's loss due to their preferential interest rate. The BGK also provides non-repayable support from the Subsidies Fund for municipal social housing for low-income households through the Social and Municipal Housing Support Programme (BSK).
Ministry of Regional Development, acting as the IROP Managing Authority.	Funds are available from the EU’s Integrated Regional Operational Programme (IROP) to develop social housing.
Financing supported housing and housing solutions for vulnerable groups
The Ministry of Labour and Social Affairs defines the social policy, guidelines for social work (preventing and addressing homelessness), social services (shelters, emergency housing, etc.) and social benefits for housing (housing allowances, emergency assistance, etc.).	The Housing First programme allocates EU Structural Funds to the construction of new housing units for homeless people by subsidizing local Housing First Initiatives since 2019.Since 2021, the Employment + (OPZ+) package has been implemented to distribute ESF+ funds, including through programmes to fight social exclusion and provide solutions to refugees from Ukraine.	The Ministry of Family, Labour and Social Policy defines the framework for social policies, as well as supported and training housing in the context of their deinstitutionalisation strategy, and partially fund municipal housing construction through subsidies.	The Programme to Overcome Homelessness (“Pokonać Bezdomność”) offers financial support to NGOs and municipalities operating supported housing solutions to people experiencing homelessness. This initiative is complementary to the statutory obligations of municipal governments in the field of counteracting homelessness, as well as it is supporting the activities of non-governmental entities operating in the field of social assistance.
The Ministry of Regional Development provides subsidies from the state budget to support the construction of supported housing.	The Apartment Building without Barriers Programme provides subsidies to municipalities to retrofit housing for elderly people (over 60 years old) and develop supported community spaces.		The Solidarity Fund and the For Life (“Za życiem”) Programme provide funds to adapt the dwellings of people with disabilities, and more generally finance supported housing.
		The State Fund for the Rehabilitation of the Disabled (PFRON) provides financial support to people with disabilities, using employer contributions and state budget.	PFRON can provide financial means to people with disabilities to help them remove architectural barriers (inside or outside of their dwellings) or move to a more suitable dwelling.

Note: The list of policies is not exhaustive and may exclude local initiatives and punctual interventions.

Source: Government of Czechia, Government of the Republic of Poland.

1.2.3. Land use policy and regulation

Both Czechia and Poland rely on all levels of government to oversee spatial planning and land use (Table 1.4). Coordination at the national level between land-use and related policies (e.g. agriculture, infrastructure, environment) is ensured by the Ministry of Regional Development in Czechia and the Ministry of Economic Development and Technology in Poland. These ministries have a similar role in establishing the national framework on spatial planning, while regional governments establish more specific regulations. The Building Act No. 283/2021 is the main regulation for land use in Czechia, defining the spatial planning system and replacing the 2006 Act. It defines the Spatial Development Policy at the state level and the Development Principles at the regional level, both being binding for the local land use plans (see Chapter 2 for more details on the Czech local plans). Environmental issues have been included in spatial planning since the 1990s (Act 17/1992, Act 114/1992, Act 254/2001 and Act 201/2012), which was reinforced by environmental assessment regulations in 2001. In Poland, the Spatial Planning and Development Act is the main national regulatory text, first established in 1994 and significantly revised in 2003. It establishes the roles of the supra-national levels of government and covering areas that are not under local plans, which still account for large parts of some urban areas since all local plans created before 1995 were invalidated by the 2003 reform.

Under the national framework, Development Principles are procured by regional spatial planning authorities (and approved by Regional Councils) in Czechia, which also deliver building permits for projects affecting several municipalities. Regional governments (heads of voivodeships and powiats) play a smaller regulatory role in Poland: they are responsible for Regional spatial plans, which have limited regulatory power, and may issue planning permissions in special cases (e.g. multi-municipality infrastructure projects). In both countries, most building permits are issued by municipalities. They establish local plans for land-use and development, which are legally binding, and hold the main administrative functions.

Table 1.4. Main institutions and regulations related to the governance of land use

Czechia		Poland
Main institutions	Main activities	Main institutions	Main activities
Ministry of Regional Development	Defining the legislative framework for the planning and zoning system through revisions of the Building Act and supervising the other levels of government. Procuring the state-wide Spatial Development Policy (updated every four years).	Ministry of Economic Development and Technology	Establishing the Spatial Planning and Development Act and the National Planning Policy (updated every four years) defining concepts and guidelines for land development, and ensures coordination with linked policies (infrastructure, environment, agriculture, waste management).
Regional authorities (within the delegated powers of the state)	Procuring the Development Principles. These plans have to be approved and issued by regional councils. Issuing special Planning permissions to projects with supra-local importance.	Voivodeships and powiats	Establishing the Regional Spatial Plans.
Municipalities with extended powers, meaning municipalities with Building Offices (those without are assigned to municipalities with extended power).	Establishing the Local Territorial Plans (Územní plan), Regulatory Plans (Regulační Plan) and Planning Studies for their area, which have to be approved by the affected municipality (except planning studies).	Gminas (excluding large cities)	Establishing the Local Spatial Development Plans, which are the only legally binding zoning plans, and executing spatial studies to provide non-binding development concepts – the latter are set to be replaced by legally binding General Plans by upcoming regulations.

Note: Czechia has three defined levels of government: the national government, 14 regions (kraje) and 6258 municipalities (obce). Poland has four defined levels of government: the national government, the 16 voivodeships acting as regional governments, 314 counties (powiats) and 66 cities with powiat status acting as intermediate government and 2477 municipalities (gminas), which are local governments. The list of policies is not exhaustive and may exclude local initiatives and punctual interventions.

Source: OECD (2017[35]), OECD (2017[36]).

Both countries currently have similar land cover repartitions at the national level, with a relatively small share of artificial areas, consistent with the EU as a whole (Figure 1.18). Croplands represent over a third of available land in both countries (compared to 24% of landcover in the EU and 11% in the OECD). This also correlates to relatively higher population densities, reaching 136.1 and 122.9 people per square kilometre in 2022 in Czechia and Poland respectively, while the EU and OECD average stood at 109 and 39 people per square kilometre (Eurostat (2023[37]), World Bank (2023[38]).

Figure 1.18. Croplands are more predominant in Czechia and Poland than in the rest of the EU

Source: Eurostat Land Use / Cover Area Frame (LUCAS) survey.

1.2.4. Energy efficiency policies

The national building codes establish baseline requirements in terms of energy use, but ministries in charge environmental issues oversee specific programmes related to energy efficiency. These ministries define the long- and short-term objectives in line with the EU targets, and structure support programmes (Table 1.5). These programmes can take different forms, from direct subsidies for energy retrofits and boiler replacements to soft loans and tax incentives.

In Poland, the 2018 Clean Air Act was set to allocate over EUR 22.7 billion to finance the renovation of single-family houses, in the form of loans and grants distributed to owner-occupiers (ECSO, 2021[39]). Renovations of multi-family housing units were supported through the TERMO programme, and these efforts are further supported by the 2021 Recovery and Resilience Plan (RRP), with a provisional budget of EUR 3.2 billion towards energy retrofits and the replacement of heaters in over 860 000 dwellings, and EUR 755 million directed towards the development of green residential housing by 2026.

Czech households can also obtain financial support to renovate, for instance through the Boiler Replacement Scheme and the Energy Saving Programme which provide similar grants and loans (ECSO, 2021[40]). Housing cooperatives have, for instance, renovated or reconstructed 80% of the prefabricated panel blocks in Czechia through the PANEL programme, which is set to allocate further funds to support residential renovations until 2030.

Table 1.5. Main institutions and programmes related to energy efficiency and dwelling retrofits

Czechia		Poland
Main institutions and responsibilities	Main programmes or activities	Main institutions and responsibilities	Main programmes or activities
Regulatory framework
The Ministry of the Environment is in charge of the main laws regulating the impact of construction and buildings on the environment.	The main regulatory texts are the Environmental Impact Assessment Act, the Integrated Pollution Prevention Act, the Air Protection Act and the Waste Act.	The Ministry of Environment establishes the general framework regulating the impact of construction and buildings on the environment.	The Environmental law sets standards regarding buildings’ impact on their surroundings and the environment, along with the Water Act and the Waste Act.
Financing energy retrofits of public and private dwellings
The State Environmental Fund contributes to environmental investment using EU funds, state budget and contributions from polluting sectors.	The Green Savings Programme covers up to 50% of the costs of a renovation, and up to 60% with an additional boiler subsidy for low-income households. Other specific subventions exist, to install rooftop solar panel for instance.	The Ministry of Climate and Environment and the National Fund for Environmental Protection and Water Management allocate subsidies to households for energy retrofits, using state budget and EU funds.	The Clean Air Act and the TERMO programme provide grants and loans for households replacing their heating system.
The Ministry of Regional Development and the State Investment Support Fund (“Státní fond podpory investic”) allocate resources to insulate multi-unit buildings.	The PANEL+ Programme finances the retrofit of dwellings with a low energy-efficiency score, including municipal units and housing cooperatives’ buildings, through subsidies and bank guarantees.		The Warm Housing Programme (“Ciepłe Mieszkanie”) covers up to 30% of the retrofit costs for municipal housing and private owners.
The Ministry of Environment and the State Environment Fund provide aid to purchase and renovate existing housing.	The Repair Grandma’s house Programme provides a subsidy to buy old houses in need of deep renovations and the access to low-interest loans.	BGK’s Thermo-modernization and Renovation Fund (financed by state budgets) provides support to energy retrofit projects in the form of subsidies through several programmes depending on the beneficiaries.	The Thermo-modernization bonus covers up to 31% of loans used to fund energy retrofits, the renovation bonus covers 15% and only for owner-occupiers, and the compensation bonus supports owners that have suffered financially from the 1994-2005 rent regulations and are undertaking a renovation project. Since 2020, the municipal bonus covers 50-60% of the cost of energy retrofits for municipal dwellings (up to 80-90% with the use of RRF funds).

Note: The list of policies is not exhaustive and may exclude local initiatives and punctual interventions.

Source: Government of Czechia, Government of the Republic of Poland.

Supporting energy retrofits not only helps increasing the energy efficiency of the residential sector and minimising its environmental impact but also contributes to improving the comfort of residents and lowering their cost burden. Energy poverty has become a particularly salient issue in Europe due to the ongoing energy crisis, especially for low-income households: according to Eurostat, 9.3% of EU households were unable to keep their dwellings adequately warm in 2022, against 8% in 2020, despite a decrease in 2021 and the implementation of national measures to support households’ energy expenses. In Czechia, emergency measures included a price cap on gas, tax breaks on energy and financial support for households’ energy bills. The Polish government’s Solidarity Shield established a similar set of measures, with caps on energy prices and their increase, and financial support for households, targeting the most vulnerable in priority (e.g. low-income, gas-based heating systems, etc.). The total cost of measures targeting households specifically accounted for 0.26% of GDP in Czechia and reached 3.69% in Poland. These costs could have been mitigated by a more energy efficient housing stock, which can be achieved by upscaling the number of renovations. There would be room to further improve and scale up energy efficiency. For instance, Czechia and Poland have achieved lower rates of residential energy savings than the rest of the EU since 2000 (ODYSEE-MURE, November 2023[41]), reporting 19.8% and 20.8% savings against 29.7% in the EU as a whole.6

References

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Annex 1.A. Description of the data used to estimate housing supply elasticities

Annex Table 1.A.1 below lists the data sources for housing prices used to estimate the elasticities displayed in Table 1.1. The regions used follow the European NUTS nomenclature. It should be noted that the methodology and original source used to compute real housing prices varies across countries, from transaction data (e.g. France) to surveys (e.g. Spain) or observed listing prices (e.g. Poland). The mean price can be computed as a simple arithmetic mean in some countries, while others use more sophisticated methods like hedonic price estimations. The information on building permits and instruments was retrieved from each country’s national statistical office’s website.

Annex Table 1.A.1. Data sources for regional housing prices

Country	Source
Poland	Statistics Poland (GUS)
Czechia	Czech Statistical Office (CSU)
Slovakia	National Bank of Slovakia
France	Directorate General of Public Finances (DG FiP)
Estonia, Hungary, Netherlands, Sweden, Denmark, Spain	European Central Bank (ECB)
Portugal	Statistics Portugal
Finland	Statfin
Belgium	Statbel

In order to estimate the elasticities, a number of controls were added to the database. Contrary to Bétin and Ziemann (2019[16]), housing demand was proxied by building permits rather than demographic evolution, since the evolution of population does not seem to follow the same trend as housing prices. In particular, the countries which have experienced the largest housing price increase (e.g. Hungary, Czechia) from 2015 to 2021 seem to have seen their population decline (Annex Figure 1.A.1). The proxy used for construction costs is also different from their work, as they used the OECD’s residential investment deflator while the estimations presented in this chapter rely on the construction cost index built by Eurostat. the proxy used here covers the entire sector of construction (including non-residential buildings and infrastructure) and takes into account material costs, energy costs and labour costs. Construction costs appear to have substantially increased since 2015, and particularly countries that have seen high inflation in housing prices (Annex Figure 1.A.2).

Annex Figure 1.A.1. Eastern and Central European countries have experienced a demographic decline in most regions

Note: The light blue lines indicates the medians, the triangles indicate the means and the boxes measure the interquartile range (Q3-Q1). Outliers are not displayed. Real prices were derived from observed prices using the OECD housing price deflator.

Sources: Authors’ computations using data from the Czech Statistical Office (CZSO), Statistics Poland (Gus), the National Bank of Slovakia, the French Public Finances Directorate General (DGFiP), Statistics Portugal, Statfin, Statbel, the European Central Bank and the OECD Analytical house price indicators.

Annex Figure 1.A.2. Construction costs have significantly increased in Central European countries

Source: Construction Cost Index computed by Eurostat.

In addition to construction costs, the estimates presented in this chapter control for the change in wages, which may have inflated housing prices. Again, there seems to be a correlation between the evolution of housing prices and wage growth, with Central European countries experiencing the largest evolution from 2015 to 2021 (Annex Figure 1.A.3).

Annex Figure 1.A.3. Wages have particularly increased in Central Eastern European countries

Note: The light blue lines indicates the medians, the triangles indicate the means and the boxes measure the interquartile range (Q3-Q1). Outliers are not displayed. Real prices were derived from observed prices using the OECD housing price deflator.

Sources: Authors’ computations using data from the Czech Statistical Office (CZSO), Statistics Poland (Gus), the National Bank of Slovakia, the French Public Finances Directorate General (DGFiP), Statistics Portugal, Statfin, Statbel, the European Central Bank and the OECD Analytical house price indicators.

Finally, housing supply elasticities were estimated controlling for policy differences across countries, using the same proxies as Bétin and Ziemann (2019[16]) : land-use governance (Annex Figure 1.A.4) and the rental market restrictiveness index (Annex Figure 1.A.5).

Annex Figure 1.A.4. Land-use governance is rather restrictive in the EU

Source: Cavalleri, Cournède and Özsöğüt (2019[15]).

Annex Figure 1.A.5. There is a lot of variation in the stringency of rental market regulations across the EU

Source: ReMain Database.

Notes

← 1.  A person is considered in need of housing if they are homeless, living in a temporary shelter or hotel, in an institutional setup (e.g. psychiatric hospital, prison), who did not have housing before entering the institution or lost it during their stay, or if their current living arrangement is overcrowded, insecure or does not meet the criteria for standard housing (e.g. no access to running water, to electricity; to a usable bathroom and / or toilet).

← 2.  For international comparison purposes, the OECD defines the social rental housing stock as “the stock of residential rental accommodation provided at submarket prices and allocated according to specific rules rather than market mechanisms” (Salvi del Pero et al., 2016[42]).

← 3.  Moreover, in Czechia, an additional 48 982 people were living in various situations of housing exclusion, including inadequate stability of tenure (evictions from rental housing, at risk without legal title, repeated contracts) and inadequate housing quality (functionally inadequate housing, overcrowding) (Czech Ministry of Regional Development, 2025[43]).

← 4.  Following the Regulation of the Prime Minister on the functioning of the Minister of Finance and Economy of 25 July 2025, the Ministry of Economic Development and Technology, together with the Ministry of Finance, is a government administration authority and provides support to the Minister of Finance and Economy.

← 5.  The Ministry of Family, Labor and Social Policy, Office of Social Welfare Services in the Department of Social Assistance and Integration can be found under other denominations in past documents (e.g. most recently the Ministry of Family and Social Policy until February 2024).

← 6.  Energy savings in ODYSEE-MURE are measured by the energy efficiency index, which is the ratio between households’ actual energy consumption in a given year and their theoretical energy consumption if there had been no change in energy efficiency relative to a reference year – here the year 2000. This theoretical consumption is derived as a weighted average of eleven end-uses (e.g. heating, washing machine, TV, etc.). For instance, 20% savings mean that households use on average 20% less energy now than in the year 2000 for the same end-uses.