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1. Is a bubble inflating on Poland’s housing market?

Author:
Adam Czerniak and Stefan Kawalec
Publication Date:
03-2020
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The year 2019 brought double-digit growth in Polish housing prices, for both new and existing homes. In some cities, real prices for residential real estate have reached the highest levels in history, even higher than at the peak of the boom in 2008. As a result, some are saying that there is a growing price bubble. But thus far no research has been produced that would comprehensively verify this hypothesis on the basis of data from 2006-2019. This work aims to fill that gap. This is exceptionally important, because assessing the likelihood that a housing price bubble is emerging is key for the conduct of monetary and macroprudential policy in Poland. Because if we’re really dealing with growth in macroeconomic imbalances, then taking pre-emptive action to limit further price growth and prepare the economy (including the financial sector) for a potential collapse in housing prices is essential for limiting fluctuations in growth.
Topic:
Markets, Economic growth, Trade, and Housing
Political Geography:
Eastern Europe and Poland

2. Financing for the Polish economy: prospects and threats

Author:
Andrzej Halesiak, Ernest Pytlarczyk, Mariusz Wieckowski, and Stefan Kawalec
Publication Date:
06-2019
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
In a properly functioning economy, finance has important role to play in making main sectors of the economy – production, trade, services – to thrive. One of the most important – and often unappreciated – channels by which finance affects the processes taking place in the real sector is the selection of investment projects. It is banks and financial intermediaries that to a great degree decide which projects are carried out in the economy at a given moment, and which are not. If financial institutions are excessively conservative (which today is often an effect of the tight regulatory environment), they will prefer low-risk projects with high levels of collateral (e.g. mortgage loans). A financial system oriented this way will rarely be a source of problems, but at the same time not inclined to finance innovative projects with high potential to benefit the economy. Thus for any economy, a very important question is whether its regulatory framework smartly balances both of these aspects: financial system safety and the need to take on risk. When analyzing the functioning of the financial system, it’s worth noting the gradual blurring of certain traditional boundaries. While decades ago households were the main source of savings in the economy, and the borrowers were enterprises and the public sector, today both households and companies are on both sides, as suppliers and receivers of capital. The boundary between the functioning of banks and capital markets is also increasingly blurred. Today banks operate broadly through the capital market, both as acquirers of securities and as issuers. One area that has been developing dynamically in recent years is the flow of financial resources bypassing traditional intermediaries: direct lending through the peer-to-peer (P2P - direct financing of a project by business partners) and crowdfunding platforms (fundraising by collecting money online).
Topic:
Demographics, GDP, Financial Markets, Economy, Banks, Investment, and Trade
Political Geography:
Europe and Poland