Short-run impact of the Ukrainian refugee crisis on the housing market in Poland

Abstract

This study analysed the impact of the Russian aggression against Ukraine in February 2022 on rental and housing prices in Warsaw and Krakow, two major cities in Poland. We hypothesize that the tremendous urban population growth (by 15% in Warsaw and 23% in Krakow) in a short period generated a housing demand shock, which, combined with constrained availability, resulted in extraordinary changes in prices and rents. Quantile hedonic indices indicated a significant increase in rents since the beginning of the Russian invasion in both markets, which were affected by the refugee shock. However, similar effects were not observed in the case of housing prices. In March and April of 2022, rents increased by around 16.5% in Krakow and 14% in Warsaw, while housing prices in both cities rose by much less (by about 4.0% in Krakow and 1% in Warsaw). Using Bayesian Structural Time Series models, we demonstrated that this abnormal rent increase is not random, and we concluded that the inflow of Ukrainian refugees most likely caused it.