Credit worthiness Over Cash: The Key to Happiness?

High interest rates, soaring property prices, and an unstable market over the past five years have made buying a home increasingly challenging in Poland. Yet, despite these obstacles, owning property remains a top priority for most Poles
—with a mortgage often marking a life-changing milestone.

A Challenging Market

The past half-decade has been a rollercoaster for prospective homebuyers. In 2021–2022, Poland’s Monetary Policy Council raised interest rates 11 times—from a mere 0.10% to as high as 6.75%. Although rates have since eased slightly to 5.75%, they remain among the highest in the European Union, posing a significant barrier for many.
Concurrently, property prices have surged by more than 50% between 2020 and 2024, further limiting housing accessibility. The outbreak of war in Ukraine in 2022 only compounded economic uncertainty and financial insecurity. Yet, the introduction of the 2023 “Safe Credit 2%” program provided a temporary boost to the market, offering a chance for would-be buyers who had previously been priced out.

The Home ownership Dream: More Than Just Square Meters

Even as purchasing property becomes increasingly difficult, the desire to own a home is as strong as ever. For 64% of Poles, homeownership isn’t just an acquisition—it’s a source of pride, symbolizing personal achievement, stability, and success. The Otodom report reveals that households with higher incomes and larger families derive even greater satisfaction from owning a home. Families with children, in particular, are more likely to see homeownership as a milestone worth celebrating, with nearly 75% of respondents affirming that owning a home boosts their overall happiness.

Shifting Preferences Amid Economic Pressures

Economic challenges have also influenced housing choices. Between 2020 and 2024, the average size of properties purchased in Poland’s largest cities ranged from 52 to 55 square meters. In 2022, when record-high prices and tightened lending policies hit hardest, the average home size dipped to 52 square meters. Despite this trend toward smaller living spaces, experts caution that this may not be a permanent shift. “Although the adage ‘better small but owned’ still holds true for many, younger consumers are increasingly prioritizing functionality and comfort,” explains Katarzyna Kuniewicz, Otodom’s Market Research Director. She predicts that if economic conditions improve, the average size of purchased properties could rise again by 2025.

Money Doesn’t Necessarily Buy Happiness

For many, buying a home is one of life’s largest financial commitments. Reflecting broader economic challenges, Poles rated their personal financial situations at a modest 4.6 out of 10. Interestingly, the youngest (under 25) and oldest (56 and over) respondents reported higher satisfaction—likely because they face fewer financial burdens. In contrast, individuals aged 46–55, who often grapple with mortgages, childcare, and education expenses, feel the strain more acutely.

Still, over half (51%) of those surveyed believe that peace of mind and happiness are not solely dependent on income or savings. As economist Dr. Piotr Michoń of Poznań University of Economics notes, “Money alone doesn’t guarantee happiness. After reaching a monthly income threshold of 7,000–10,000 PLN, additional earnings don’t significantly enhance life satisfaction.”

Mortgages: A Path to Well-Being

Despite the stress and financial strain that often accompany a mortgage, it remains one of the most popular means of financing a home purchase in Poland. According to the report, 70% of borrowers, in retrospect, consider their decision to take on a mortgage as the right one. Two-thirds of respondents even prefer owning a home—with its associated debt—over remaining unburdened financially. Moreover, 57% of recent mortgage holders believe that buying a home on credit has improved their overall well-being. While these individuals report higher levels of happiness compared to those without housing loans, they still fall short of the contentment experienced by those who have fully paid off their mortgages.

The Road Ahead

In a landscape marked by financial hurdles and market instability, the dream of homeownership remains deeply ingrained in Polish society. The latest Otodom report—“To Have or To Be? Well-Being of Polish Residents at the Intersection of Finances and Living Space”—offers a comprehensive look at how economic conditions and evolving financial habits are shaping the nation’s approach to property ownership. As challenges persist, one thing remains clear: for many Poles, the pursuit of a home is about more than just money—it’s about building a foundation for happiness.

For further insights into the evolving dynamics of property ownership, financial well-being, and housing market trends in Poland, consult the full report from Otodom’s “Happy Home” series.