For residents of Poland’s cities, construction of their own detached house was a luxury that was only available to a small group of people until recently. The majority of people lived in residential blocks and watched those lucky few with envy.

Today, because of the dynamic growth in apartment prices, it is often cheaper and more advantageous to build a house than to purchase an apartment. More and more Poles have become developers because of their economic circumstances. According to the General Office of Building Control (GUNB), construction permits for almost 105,000 detached houses were issued in 2007. That is 40% more than in 2006 and the second highest number of permits issued in a year. (The highest number of permits were issued in 1999, the last year income tax deductions were available for construction purposes. People who managed to begin construction before 2000 were allowed to make high tax deductions for three years. As soon as the tax deduction disappeared, the number of construction permits fell dramatically.)

Many experts believe the growing interest in house construction is being driven by the enormous increase in the price of apartments. Instead of spending their hard-earned money on small apartments in residential blocks, Poles have begun constructing their own detached houses on a large scale. The price of a two- or three-bedroom 50 to 60 m2 apartment in a good area is more or less equal to the cost of building a house of 150 m2 outside the city. The difference is continually changing – to the benefit of apartments. The cost of building a detached house has already grown by nearly 30% compared to January 2007.

A Pole who decides to build a house automatically becomes a developer. They also begin to personally experience all the unfavourable trends in the construction market including the growth in the prices of construction materials, labour and land.

Individuals who decide to build their own houses are exposed to unfavourable market conditions to a greater extent than large developers. Often they are unable to negotiate better purchase conditions for materials or effectively enforce the repair of defects by contractors. Coupled with insufficient financing, these factors often affect the quality of the investment. In order to save money, poor materials are used in many projects or labourers with inadequate qualifications are hired. Only people with high incomes can afford to develop well situated and well equipped plots of land. Cheaper plots are usually situated a long way from city centres, guaranteeing problems with everyday journeys to work once the house is built.

What is the future for those Poles who decide to build their own houses? There are no indications that their situation might become easier. Producers and distributors of construction materials estimate that the cost of their products will grow by between 5 and 15% this year. Increases in material prices may be higher if the costs of cement producers are affected by CO2 emission limits. Employer organisations estimate that salaries in the construction sector will rise by around 10% in 2008. Unfortunately the price increase will not be matched by increased efficiency. Experts claim that the cost of labour will not grow as much as it has in the past. However, investors – both private and institutional – may find it difficult to recruit experienced professionals in almost all specialisations.

The negative factors are partly compensated by financing relief. By building a house yourself, you can still recover tens of thousands of zloty by recouping VAT spent on construction materials. Investment subsidies are also available from the government budget.

Professional developers are not giving up. GUNB advises that the number of construction permits for multi-family buildings increased by 56% in 2007. According to the Central Statistical Office, 117,500 new apartments came on the market in 2007, nearly 58% more than in 2006. This is good news for buyers who can hope for better purchase conditions thanks to the greater activity of investors. The situation is also beneficial to contractors and producers of construction materials as well as manufacturers of equipment for apartments and offices.