Affordable Housing in Central and Eastern Europe: Constrains in New Member States (EHP, Nov 2017)

• Affordable Housing in Central and Eastern Europe: Identifying and Overcoming Constrains in New Member States

• By József Hegedüs, Vera Horváth and Eszter Somogyi, in cooperation with Anna Bajomi, Éva Gerőházi and Hanna Szemző. Research conducted by the Metropolitan Research Institute (MRI) and published by the European Housing Partnership (EHP) on 1 November 2017

• Available as a PDF file on the European Commission's site: https://ec.europa.eu/futurium/en/system/files/ged/2._affordable_housing_in_central_and_eastern_europe.pdf

• Summary:

  • This study first identifies the situation of new CEE [Central and Eastern Europe] member states (NMS) in the context of the European Union, and analyzes the differences and similarities among the three larger regions of the EU:

    • (1) the most developed group of countries in Northern and Western Europe;

    • (2) the Southern European countries; and

    • (3) the Central and Eastern European transition countries.

  • Our analysis uses statistical indicators from four main areas: economic, demographic, social, and housing (stock and market) developments.

  • It then focuses on differences among the eleven NMS, especially on the most relevant issues (economic growth, demography, social inequality and poverty) for understanding their housing system development patterns, and policy makers’ responses to social and economic changes.

  • The next sections give a short overview of the main trends in the housing sector, taking a closer look at privatization and restitution, housing finance, housing construction, and management.

  • The second major part of the study provides a revised approach and reinterpretation of housing affordability in the CEE context, taking into account the risks run by the social groups which are the most vulnerable to hardships in housing affordability, going beyond the most widely used measure of affordability expressed in a cost-to-income percentage ratio, and pointing out its limited usability in a CEE context (as it leaves out of the equation major issues, such as location, adequacy, the risk of inexpensive but substandard housing etc.).

  • The key section takes a look at the structure of the housing market in NMS, combining the tenure based approach with the ‘structures of housing provision’ approach, introducing a special submarket matrix to provide a dynamic understanding of affordability in the CEE context.

  • The final part the study presents recommendations on the principles of developing effective schemes to support housing affordability in a way that also benefits the most at-risk.

• Keywords: affordability, Central and Eastern Europe, CEE, New State Members, NSM, demography, inequality, poverty, policy, privatisation, finance, construction