Current housing issues and trends in Hungary

Transcription

1 Current housing issues and trends in Hungary Iván Tosics Metropolitan Research Institute Budapest International Seminar on Sustainable Communities and Urban Housing Dublin 2 June 2017

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3 The change from planned to market economy: early 1990s Following the collapse of the socialist system the historic pendulum went to the other side (Bertaud-Renaud, 1995). Regarding urban development: the over-sized public housing sector had to be reduced and the top-down political and planning system had to be changed. The main restructuring processes: the privatization of the housing stock the decentralization of the administrative structure

4 Privatization of public housing Two options to reduce state ownership: restitution and privatization Based on central or local government decree the tenants buy their units on a discounted price Privatization in east-central European countries was give-away privatization : discounts were huge Mass-privatization of housing was the single biggest wealth transfer which affected directly the households in the E-C-European region.

5 Housing privatisation Public rental as a percentage of all dwellings 1990 Around 2006 Estimated percentage privatised since 1990 Estonia Latvia Lithuania Poland Czech Republic Slovakia Hungary Slovenia

6 The consequences of mass privatization Positive effects: Condominiums in better areas started renovations; individual flat-ownership played a shock-absorber role Privatization helped the kick-start of small SMEs Negative effects: Growing inequalities in housing consumption Growing differencies in the chances for renovation of buildings, leading to spatial differentiation Emergence of social problems in the housing sector

7 Tenure categories in EU countries 100% 80% 60% 40% 20% 0% HU BG PL EU25 F A NL social rental private rental owner occupied

8 Countries Old EU countries Transition countries Social (public) rental housing Poverty rate NL, S, A % % D, F, UK % % ES, P, EL 1 5 % % CZ, POL % % H, EST 3 4 % % ALB, BUL, ROM 1 3 % %

9 Growing social polarisation Large-scale privatization increased inequalities and also created many low income home owners (without safety net) Post-socialist economy: with unemployment poverty increased, while social housing disappeared and social policy reduced drastically The consequence is the increase in homelessness and poverty, more and more visible in public spaces The reaction of the public hand is fragmented and very limited in the 1990s

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12 Hungary in comparison to 10 countries M. Pareja and N. Winston (Eds) Sustainable Communities and Urban Housing: A Comparative European Perspective, 2016 GDP per capita in PPP: Hungary is the second poorest country after Romania, just above the half of the average of the EU28 countries the unemployment figure is moderate, due to efforts of the present government to force unemployed people to participate in public work housing system: super home ownership, over 90% of owners the level of poverty and social exclusion is the second highest among the countries investigated, well above the EU28 average the modal split of passenger transport is the best, showing the highest share of public (train, bus) transport as opposed to car use in the environmental protection index Hungary is the second worst country after Romania, although not so far from the EU28 average Hungarians pay above average for housing costs compared to their incomes, especially those who have mortgage but also the tenants Hungary has the second lowest value of housing quality, indicating huge problems with physical quality and overcrowding of dwellings.

13 The weakest aspects of HU housing arrears on mortgage rate of those below 60% of median income: Hungary has the second highest share, 63% after Greece EU28 average is 32%; severe housing deprivation rate of those below 60 percent of median income: Hungary has second highest share (45%) after Romania while EU28 average is 13%; poor energy performance of housing and high level of fuel poverty Due to the super home ownership housing structure and the lack of any sizeable public (affordable) rental stock not the quantity of the housing stock is the main housing problem in Hungary but the low quality and deprivation of the existing stock and the low level of affordability.

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15 The share of Foreign Exchange (FX) Loans in Residential Mortgages, 2003 & 2008

16 Government policies in the 2010s The FX loans (72% of the mortgage portfolio) became large problem with the financial crisis, worsening exchange rate of Forint HU government converted compulsorily all FX loans into HUF loans in November 2014 (just before the huge further increase in the value of the Swiss Franc in January 2015), putting the largest burden on the banks 2015: withdrawal of the previous general housing allowance system, now it is covering only a fraction of people, based on decisions by the local municipalities 2016: new support program for improving housing conditions of families with at least 3 children. This can give an impetus to the housing market (new construction and enlargement of existing housing) but will not affect affordibility problems as the conditions favour mostly middle class families.

17 Lack of affordable housing The lack of affordable housing units could best be handled with the expansion of the (below market-rent) stock of rental units. This would not need new construction, it could be done on the basis of the existing housing stock, in which some half million units stay vacant at the moment However, to introduce new, socially oriented rental housing policy is far away from the philosophy of the present right wing government which makes steps into the opposite direction Recently there are only informal and bottom-up efforts in Hungary to re-use parts of the empty owner occupied housing sector through innovative new rental housing agencies (Hegedüs et al, 2015).

18 Comparison of the sustainability performance of the socialist vs capitalist housing systems From an economic perspective the Socialist model was much less efficient: new public housing was built with large state subsidies in areas and forms which consumers did not really like; investment decisions ignored land values (inner city areas with potentially large market and heritage values were left to deteriorate); management of public housing was very inefficient: systematic renovation was replaced by politically decided prestige-improvements. While these inefficiencies disappeared in the Market model, unfortunately so did the public housing sector which has largely been privatized.

19 Regarding the environmental dimension the Socialist model was in some respects more sustainable than the Market model. In the socialist period cities were developed in a compact way: a large share of new housing in cities was built on large housing estates with high densities, were heated with environmentally friendly district-heating systems, had large green areas and were well supplied by public transport, making individual car use unnecessary for travel to work. However, due to cheap energy prices, the insulation of buildings was very poor and also the green areas and public transport were developed/running at a relatively low standard. Under the Market model the development of environmental infrastructure has speeded up but mostly in suburban areas without any consideration for compact development.

20 Considering social sustainability, there is no clear superiority of any of the two housing models. Housing affordability was in general less a problem in the Socialist model: poor families could afford the costs of state rental housing as rents were kept artificially low. However, a large strata of society was totally excluded from this option and had to solve their housing needs with self-building or within the subordinated private sector. Socio-spatial segregation was lower in the Socialist model. In the last decades of the socialist period, however, segregation of higher status groups started to increase. The present Market model, with its huge owner-occupied housing sector, offers gradual opportunities to enter the system with relatively low prices at the lower end of the housing hierarchy (deteriorated inner city housing, peripheral housing estates). On the other hand, the segregation of the middle class and richer families became much stronger, as they are now concentrated in the best, fully renovated parts of the inner city, new gated garden estates or high-status suburban areas. Furthermore, there is a growing tension between the hundreds of thousands of vacant flats and the hundreds of thousands of families without suitable housing.

21 The return of central control in an unwanted way 1990s: decrease of public control with large-scale privatization of the housing system and decentralization of territorial governments different national governments had different aims and almost never continued the programmes of the previous ones second half of the 2000s: some attempts at national level to handle the most pressing sustainability problems (e.g. national system of housing subsidies, introducing micro-regions to foster territorial cooperation, developing social proofing of development plans to ensure more just urban development). Unfortunately, these failed to develop into well established policies. since 2010 strong political power with 2/3 majority in the Parliament. However, the power was used to further increase social inequalities and to push through contradictory regulations regarding the environment. Public control over market processes became much stronger but not for the sake of more environmental and social sustainability.

22 The dominance of national politics and related market forces Present urban development problems would need democratic discussions, with the participation of the population Instead, the population and the local level is losing power: Budapest: key investments are decided by the leading political party, the opinion of residents and democratic debates are totally eliminated Castle hill, City Park, Római dam and many other large projects are declared as special interest projects, to be decided exclusively by the central political will

23 City Park in Budapest the plan for a Museum Quarter

24 Illiberal and anti-democratic policy making Urban development strategies should answer the burning issues of today, e.g. how to use the communist heritage (compact city, dense public transport networks, large estates with district heating and green areas) in a positive way, how to stop segregation, how to deal with migration Instead of local discussions on real problems with the participation of the population, urban development is decided by the ruling party, using loyal capitalists for implementation, often via spectacularization (events, areas, buildings),

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26 A new convergence in Eastern Europe? Ivan Szelényi: After the post 1990 divergence some form of (unfortunate) reconvergence is going on in Easten Europe Putin: loyalty test for the boyars of Jelcin. Property rights were becoming uncertain prebendalism (elected officials, government workers feel they have a right to a share of government revenues, and use them to benefit their supporters, co-religionists) The Chinese also changed their way to capitalism property rights were made uncertain also here East-central Europe has also got the Putin virus: making property rigths insecure, introducing price controls, making tax levels unpredictable, starting criminalization heading towards illiberalism, diminishing the separation of power, eliminating checks and balances

27 A personal story: my illusions In the last 25 years I had a couple of ideas which proved to be illusions 1. early 1990s, Szolnok experiment: illusion that privatization can be stopped with clear, evidence based arguments 2. late 2000s, Hungarian policy innovations (integrated planning with social proofing): illusion that such innovative and equalizing policies can survive political changes 3. belief in a democratic, strong public sector, being able to regulate the externalities (especially social injustice) of market processes: a false hope: if the public sector becomes stronger this leads rather to prebendalism and illiberal democracy I am not optimistic about the future of the east of Europe the only hope today is the good sense of humour in these countries

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31 Iván Tosics