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Housing Finance in the Aftermath of the Foreign-Currency Mortgage Crisis in Eastern Europe

Debt Relief or Exit: The Long-Term Effects of Forex Loans on Latvian Households

Debt Relief or Exit: The Long-Term Effects of Forex Loans on Latvian Households

The stubborn decision of the Latvian government to join the eurozone at any cost put a great burden on Latvian households after the crisis of 2008. Nevertheless, no popular protest movement emerged to change the course of this decision. This study discusses why Latvians undertook individual strategies to cope with the forex loan crisis. Particularly, I look at the choice between formal debt relief procedures and emigration as alternative individual strategies for defaulted debtors. These programmes have not reversed the negative migration trends or significantly decreased the number of Latvian households in arrears. Debt discharge is mainly attainable for wealthy individuals who are able to mobilise their financial and kinship resources. Worse-off debtors cannot attain debt discharge or are stigmatised during the process. Alternatively, emigration has offered a way to cope with overindebtedness and keep up with mortgages and consumer loan payments for a much larger segment of the debtor population.

24.6.2022 | Andris Saulitis | Volume: 9 | Issue: 1 | Pages: 48-56 | 10.13060/23362839.2022.9.1.540
Housing Finance in the Aftermath of the Foreign-Currency Mortgage Crisis in Eastern Europe

Whither Peripheral Financialisation? Housing Finance in Croatia since the Global Financial Crisis

Whither Peripheral Financialisation? Housing Finance in Croatia since the Global Financial Crisis

This article analyses recent developments in Croatian housing finance to update the established account of housing finance and peripheral financialisation in Eastern Europe that is based on the boom-bust cycle of the 2000s and early-to-mid 2010s. During the bust stage of that cycle, changes in regulation and in the behaviour of debtors and creditors resulted in deleveraging and a shift away from the risky and exploitative lending practices characteristic of peripheral housing finance. However, new increases in household debt and housing prices since 2016–17, coupled with the COVID-19 pandemic, seem to have reversed these trends. While a boom-bust cycle of similar scope and modality to the first one is unlikely to be repeated, peripheral forms of housing finance have persisted to some degree.

23.6.2022 | Marek Mikuš | Volume: 9 | Issue: 1 | Pages: 57-67 | 10.13060/23362839.2022.9.1.541
Housing Finance in the Aftermath of the Foreign-Currency Mortgage Crisis in Eastern Europe

Different Debtors, Different Struggles: Foreign-Currency Housing Loans and Class Tensions in Romania

Different Debtors, Different Struggles: Foreign-Currency Housing Loans and Class Tensions in Romania

Management of foreign-currency household debt in Romania in the aftermath of the Global Financial Crisis in 2008 had the effect of deepening pre-2008 class disparities and treated debtor categories differently according to their income. In this article we contribute to the debate on subaltern financialisation by showing how post-crisis credit and housing policies contributed to the fact that today different debtor groups (i.e. by type of credit but also by time of lending) find themselves at opposing ends of the political spectrum based on different class alliances, with those who benefited from the crisis-management polices positioning themselves against those who were the ‘losers’ under these same policies.

22.6.2022 | Ioana Florea, Mihail Dumitriu | Volume: 9 | Issue: 1 | Pages: 68-77 | 10.13060/23362839.2022.9.1.542
Housing Finance in the Aftermath of the Foreign-Currency Mortgage Crisis in Eastern Europe

Forex Mortgages and Housing Access in the Reconfiguration of Hungarian Politics after 2008

Forex Mortgages and Housing Access in the Reconfiguration of Hungarian Politics after 2008

After a boom in foreign-currency denominated (forex) mortgage loans in the 2000s and the resulting debt crisis in 2008-2009, Hungary’s debt management came to be defined by a highly politicised combination of several phenomena: the existence of a large social base at risk of defaulting on their mortgages; the integration of debtors’ struggles into a shift from the post-socialist dominance of neoliberalism to a national conservative political hegemony during the crisis years; and the political foregrounding of forex debt management in the post-2010 Orbán governments’ construction of a new financial model as part of a post-neoliberal authoritarian capitalist regime. The article traces how two main aspects of the forex mortgage crisis, housing debt under dependent financialisation and the problem of limited housing access, became integrated into Hungary’s electoral politics and macroeconomic transformation in the last decade.

21.6.2022 | Agnes Gagyi | Volume: 9 | Issue: 1 | Pages: 78-86 | 10.13060/23362839.2022.9.1.543
Housing Finance in the Aftermath of the Foreign-Currency Mortgage Crisis in Eastern Europe

Housing Uncertainty: Socio-economic Inequality and Forex Loans Trajectories in the Bosnian Housing Market

Housing Uncertainty: Socio-economic Inequality and Forex Loans Trajectories in the Bosnian Housing Market

This article explores the nexus between the financialisation of housing and socio-economic inequality in Bosnia and Herzegovina (BiH). In this context, since the post-war economic reforms, driven by deindustrialisation, the precarisation of labour, and dependent financialisation, housing loans have become a ‘privilege’ for a restricted group of people with high and stable incomes. Instead, the housing aspirations of Bosnians are generally met with the aid of consumer loans and the ostensibly cheaper FX loans that were introduced in the mid-2000s. Drawing on quantitative and qualitative data, this paper highlights the enduring features of the polarised credit market in BiH. It particularly focuses on the period after the 2008 crisis when lending policies were only mildly re-regulated. FX loans never became the object of an ad hoc law to convert them to Bosnian convertible marks. This institutional approach has been unable to challenge the extreme class segmentation of housing finance and is still fostering indebtedness and precarious housing conditions among the lower-income segments of Bosnian society even after the pandemic.

20.6.2022 | Zaira T. Lofranco | Volume: 9 | Issue: 1 | Pages: 87-97 | 10.13060/23362839.2022.9.1.544

Self-reported and Market Home Values in Housing Wealth Inequality Measurement: Evidence from Warsaw and Prague

Self-reported and Market Home Values in Housing Wealth Inequality Measurement: Evidence from Warsaw and Prague

This paper aims to examine whether self-reported home valuations can be a substitute for objective market data in studies on the level of housing wealth inequality. In order to achieve this aim, information on subjective values of flats and their features in Warsaw (Poland) and Prague (Czechia) was used. Next, hedonic models were estimated to calculate the objective values of these residential properties. The results indicated that, on average, homeowners overestimated their real estate by 2.10% in Warsaw and underestimated by 5.49% in Prague. Finally, using tests for the equality of variances, it was examined whether the level of housing wealth inequality differed significantly when calculated using subjective and objective home values. The findings showed that self-reported home values cannot serve as a perfect proxy for market values when assessing the level of housing wealth inequality in both cities.

5.5.2022 | Mateusz Tomal | Volume: 9 | Issue: 1 | Pages: 29-38 | 10.13060/23362839.2022.9.1.538

Sustainable Recovery? Deciphering Hungary’s Residential Property Market before the Pandemic

Sustainable Recovery? Deciphering Hungary’s Residential Property Market before the Pandemic

This paper develops some analytical perspectives for a proper assessment of the dynamics observed on the Hungarian residential property market over the last decade. These dynamics are examined in comparison to official policy objectives. On the one hand, sustainable development and social balance were particularly urgent issues after the last financial crisis. On the other, the residential property market was officially instrumentalised to achieve them. We examined real estate market processes using data from the Hungarian Central Statistical Office and found a change in investment motives and in the main groups of actors dominant in the market, and we also examined the role of foreign investment. At the aggregate national level, the past decade looks like a process of recovery. Nonetheless, the factors relevant for the observable dynamics do not seem to correspond to the goals also formulated in the new constitution, but rather document the investment fever of certain groups.

4.4.2022 | Jörg Dötsch, Tamás Ginter | Volume: 9 | Issue: 1 | Pages: 16-28 | 10.13060/23362839.2022.9.1.537

Understanding the Economic Situation of People Who Took a Foreign Currency Mortgage in Hungary and Poland

Understanding the Economic Situation of People Who Took a Foreign Currency Mortgage in Hungary and Poland

In this article we show that significant differences between the foreign currency mortgage agreements in Hungary and Poland led to significant differences in monthly mortgage payments after the Global Financial Crisis (GFC) erupted. Hungarian banks were able to add a variable markup to the LIBOR3M that was connected to bank risk on top of the usual fixed markup. We compare the monthly mortgage payments and LTV levels of people who took out a CHF mortgage with those who obtained a local currency mortgage during the mortgage boom years of 2006–2008. We find that in the initial years of the mortgage CHF mortgages were cheaper than local currency mortgages, which allowed more people to buy housing. However, the GFC led to a deterioration of the exchange rate, and monthly payments and LTV levels (consequently?) increased. We analyse the mortgage costs and LTV levels of the 2006-2008 foreign currency (FX) mortgage vintages in Hungary and Poland between 2006 and 2020 and compare them to local currency mortgages. We also simulate the effects of changing housing prices and wages on mortgages in the cities of Budapest and Warsaw.

3.3.2022 | Hanna Augustyniak, Adrienne Csizmady, József Hegedüs, Jacek Łaszek; Krzysztof Olszewski, Eszter Somogyi | Volume: 9 | Issue: 1 | Pages: 1-15 | 10.13060/23362839.2022.9.1.536

Why Has the COVID-19 Pandemic Had a Limited Impact on the Primary Housing Market in Poland?

Why Has the COVID-19 Pandemic Had a Limited Impact on the Primary Housing Market in Poland?

In this paper we present the first insight about the impact of the COVID epidemic on the pri-mary housing market in Poland, with a focus on Warsaw which is the largest market. We ex-plain the structural features that allowed the market to return to pre-shock levels after the pandemic shock. Contrary, after the 2007-2008 global financial crisis the negative consequences lasted for several years. This time a sharp monetary policy and fiscal intervention was carried out. Moreover, the developer sector is much more mature, has expanded its production capaci-ties. We show empirically that the monopolistic competition of developers allowed them to restrict excessive demand that was observed before the COVID broke out. In this way they were able to increase prices despite the economic problems. Another important structural change was the increased housing demand, mainly for investment housing, which was fi-nanced predominantly with cash and contributed to the development of the rental market. We approximate the investment demand, which was generated by private households that pur-chased flats for rental, with the help of a simple demand and supply model.

12.7.2021 | Hanna Augustyniak, Jacek Łaszek, Krzysztof Olszewski, Joanna Waszczuk | Volume: 8 | Issue: 2 | Pages: 1-15 | 10.13060/23362839.2021.8.2.534
Short-Term Rentals and the Housing Market

The Impact of Airbnb on Long-Term Rental Housing: The Case of Ljubljana

The Impact of Airbnb on Long-Term Rental Housing: The Case of Ljubljana

Airbnb has become a fixture in the development of global cities, especially influencing their residential characteristics. The company derives from the concept of the sharing economy, the essence of which is the exchange of services or goods between individuals that set the rules of operation without generating profits, but together generating more revenue. It insists that it does not represent direct competition to other urban accommodation services and that it merely seeks to expand the tourism market. Nonetheless, this article proceeds from the assumption that Airbnb is influencing and transforming the housing market of the cities it operates in. It focuses on Ljubljana, which until 2019 had a record number of international arrivals and overnight stays. The findings confirm that short-term Airbnb rentals affect the long-term rental market in Ljubljana. They also show that rentals through Airbnb involve an extremely high share of the grey economy.

19.6.2021 | Boštjan Kerbler, Polona Obrč | Volume: 8 | Issue: 1 | Pages: 150-158 | 10.13060/23362839.2021.8.1.531

Normalisation of the Speculative Frame Method and Its Application to the Housing Market in Poland

Normalisation of the Speculative Frame Method and Its Application to the Housing Market in Poland

This article proposes the normalisation of the speculative frame method for identifying real estate bubbles, price shocks, and other disturbances in the real estate market. This index-based method relies on time series data and real estate prices. In this article, the speculative frame method was elaborated and normalised with the use of equations for normalising data sets and research methodologies. The method is discussed on the example of the Polish housing market.

22.3.2021 | Justyna Brzezicka, Radosław Wiśniewski | Volume: 8 | Issue: 1 | Pages: 36-46 | 10.13060/23362839.2021.8.1.521

The Impact of the COVID-19 Pandemic on the Private Rental Housing Market in Poland: What Do Experts Say and What Do Actual Data Show?

The Impact of the COVID-19 Pandemic on the Private Rental Housing Market in Poland: What Do Experts Say and What Do Actual Data Show?

The aim of the article is to determine the impact of the COVID-19 pandemic on the level of housing rents using the example of the City of Krakow. This study is based on objective data on rental prices and subjective information obtained from real estate agents using a questionnaire survey. The research revealed that the first wave of the COVID-19 pandemic actually led to a 6-7% decrease in prices in the rental market in Krakow, while at the same time the surveyed real estate agents had estimated that rents would drop by about 13%. With the second wave of the pandemic, it is possible to see that its immediate impact, i.e. between the third and fourth quarter of 2020, has led to a further 6.25% drop in rents. It should be noted that the latter decrease was very accurately predicted, both by the survey respondents and by the econometric models used. Finally, the results of the analysis also indicated that the worsening of the pandemic in the last quarter of 2020 will have a significant impact on rent levels in Krakow for all of next year. Regardless of how the economy develops, rental prices are forecast to fall further in 2021q1. However, in the subsequent quarters of 2021, rents are projected to increase, but ultimately their level will not return to pre-pandemic values even in 2021q4. The latter is likely to happen only in the second half of 2022.

18.3.2021 | Mateusz Tomal, Bartłomiej Marona | Volume: 8 | Issue: 1 | Pages: 24-35 | 10.13060/23362839.2021.8.1.520

Interpretation and Representation in Housing Policy Discourse as Exemplified by Council Tenants’ Participation in the Jazdów Estate (Warsaw)

Interpretation and Representation in Housing Policy Discourse as Exemplified by Council Tenants’ Participation in the Jazdów Estate (Warsaw)

The goal of this paper is to demonstrate the usefulness of the What’s the Problem Represented to Be approach (WPR), a tool of policy analysis developed by the Australian political scientist Carol Bacchi to examine the discursive representations of council tenants’ participation in connection with the inclusion of council housing tenants from the Jazdów Estate in the decision-making process relating to local housing policy in Warsaw. The article identifies two discursive representations of council tenants’ participation: (1) council tenants as an expected passive audience in top-down policymaking and (2) the limited acceptance of the agency of council tenants in policymaking. It was found that in Warsaw - or at least in the case of Jazdów - the political and discursive interpretation of tenants’ participation is primarily associated with the act of informing and less often with public consultation or the co-production of housing policy.

16.3.2021 | Aleksandra Zubrzycka-Czarnecka | Volume: 8 | Issue: 1 | Pages: 1-10 | 10.13060/23362839.2021.8.1.518
Varieties of Housing Regime Approaches

Understanding Housing Development in New European Member States - a Housing Regime Approach

Understanding Housing Development in New European Member States - a Housing Regime Approach

The paper will address the development of housing regimes in the new EU member states,introducing the analytical framework of a housing sector matrix to classifyforms of housing by tenure andintegration mechanism. Thus, ourhousing sector matrixcombines two common approaches: thestructure of housing provision (Ball and Harloe 1992) and the tenure-focused approach (Kemeny 1981, 1995). Starting from this rough typology of housing provisions, we also take further factors that have a major impact on the behaviour of stakeholders/actors into consideration, namely the legal/regulatory environment and the subsidy/tax system, to define the housing regimes. In its analysing of the development of the new member states the paperdifferentiates between global factors (economic development model, countries’ position in global economic structures, etc.) and local factors like the political/power structure, mainstream social ideology, the interplay betweendifferent stakeholders, etc. Institutional analyses (Bengtsson and Ruonavaara 2010) that take path-dependent factors into account are thus best able to address the process by which new housing regimes emerged in post-socialist countries and the degree to which we find convergence/divergence trends. The paper analyses three junctures in the development process after 1990: radical changes after the collapse of the old system; the development of the mortgage market and the regulation of the social sector at the turn of 2000; and reactions to the financial crisis of 2008. The paper concludes that the new member states are following the same trajectory despite their institutional differences.

3.6.2020 | József Hegedüs | Volume: 7 | Issue: 1 | Pages: 49-62 | 10.13060/23362839.2020.7.1.503

Family Housing Pathways: An Introduction to the Study of Housing in Poland in Biographical and Historical Perspectives

Family Housing Pathways: An Introduction to the Study of Housing in Poland in Biographical and Historical Perspectives

The article describes the approach and method of Family Housing Pathways. This process of gathering and presenting data makes it possible to include the extended family’s housing resources, the management of these resources, and the transformations of households within a family. Twenty-eight Family Housing Pathways were gathered and collected as part of an assignment given to students as part of an undergraduate course on housing problems. The exercise shed light on recurring themes in the transformation of the housing system in Poland that influence individual and family management of housing resources. Even a sample of relatively privileged families demonstrates that housing is clearly a crucial dimension, especially in times of transition, e.g. in post-communist Poland after 1989. The Family Housing Pathways approach could be a promising tool as well as an approach that combines biographical and historical housing perspectives, without losing sight of concerns of a practical and ethical nature.

16.12.2019 | Magdalena Mostowska | Volume: 6 | Issue: 2 | Pages: 13-23 | 10.13060/23362839.2019.6.2.488

The Financial Instability of Housing First Families in the City of Brno – the Risk of the Recurrence of Homelessness

The Financial Instability of Housing First Families in the City of Brno – the Risk of the Recurrence of Homelessness

This article presents the partial research findings on financial instability as a risk factor for the recurrence of homelessness among families enrolled in a Housing First project in the City of Brno (Czech Republic). The project represents an evidence-based social innovation focused on ending families’ homelessness. The research was designed as a Randomised Controlled Trial study accompanied by a qualitative evaluation. The data were collected through questionnaires, individual interviews, and focus groups. In the results section we follow the logic of a financial stability model and conclude that research results on financial stability overall did not prove to be statistically significant on a short-term scale. In the discussion, we state that prolonged material poverty combined with the nature of the Czech housing benefit system and the experience of residential alienation could increase the risk of the recurrence of homelessness for families. A crisis financial fund was established in an effort to prevent this.

13.12.2019 | Eliška Černá, Petr Kubala, Štěpán Ripka | Volume: 6 | Issue: 2 | Pages: 24-32 | 10.13060/23362839.2019.6.2.489

The Diverse Economies of Housing

The Diverse Economies of Housing

This paper questions the uncritical transfer of neoliberal concepts, such as financialisation and overreliance on conceptual dichotomies like formal/informal, as the lenses through which to understand practices of housing provision and consumption in the post-communist space. To this end, it introduces the newly-established ‘diverse economies’ framework, which has been used elsewhere to reveal existing and possible alternatives to advanced capitalism. Applied to the Romanian case, the lens of diverse economic practices helps shed light on the ways in which the current housing system was historically constituted, with implications for how housing consumption is now stratified across some related housing typologies. The paper invites debate on the theoretical usefulness of the diverse economies framework to study housing phenomena, particularly its implications for understanding patterns of inequality and poverty, its potential to devise useful analytical categories, and its effect of directing attention to acts of resistance to neoliberal capitalism.

18.2.2019 | Adriana Mihaela Soaita | Volume: 6 | Issue: 1 | Pages: 32-41 | 10.13060/23362839.2019.6.1.454
Housing Financialisation and Families

Informal Practices in Housing Financialisation: The Transformation of an Allotment Garden in Hungary

Informal Practices in Housing Financialisation: The Transformation of an Allotment Garden in Hungary

Although financialization of housing is well known global concept, in our paper we attempt to present how financialization produces new spaces and household practises in a Central Eastern European semi-pheripheral context. We approach this framework through an anthropological investigation, the transformation of allotment gardens what we consider as a combination of social and spatial transformations after the 1990s. In our case study we are curious how different waves of financialization influence the formation of the transformation of an informal housing space and how informal practices of the households could be an agency against financialization.

5.12.2018 | Andras Vigvari, Ágnes Gagyi | Volume: 5 | Issue: 2 | Pages: 46-55 | 10.13060/23362839.2018.5.2.442
Social Housing after the GFC: Further Evidence

Building Partnerships for Social Housing: Growing Housing Needs and Effective Solutions for Albanian Cities

Building Partnerships for Social Housing: Growing Housing Needs and Effective Solutions for Albanian Cities

Partnerships have a long history in European social housing with a mixed degree of success. They are an emerging model in post-socialist countries driven by budgetary constraints, rapid privatisation of public housing, and pragmatic efforts to respond to a complex housing affordability crisis. This article evaluates the challenges and opportunities of a new partnership model implemented in Albania to provide social rental housing. The project, launched in 2009, involves a legally defined partnership between central and local governments, the private sector, and an international financial institution. It has doubled the amount of municipal rental housing, addressing the needs of low- and mid-income households in Albania through the construction of 1,138 rental apartments for 4,300 people in eight cities. The allocation process, although politically charged, has been targeted. The partnership has capitalised on efficiencies, sound fiscal management, and cost and quality control. Despite some construction delays and potential concerns related to future sustainability, we argue that the partnership model is effective and has an important learning and innovation role for the future provision of social housing in Albania as well as in other post-socialist countries in South-East Europe facing similar challenges.

25.12.2017 | Sasha Tsenkova, Doris Andoni | Volume: 4 | Issue: 2 | Pages: 39-53 | 10.13060/23362839.2017.4.2.385
Social Housing after the GFC: Further Evidence

Mind the Poorest: Social Housing Provision in Post-crisis Romania

Mind the Poorest: Social Housing Provision in Post-crisis Romania

This paper reflects on recent social housing developments in Romania. It understands social housing as rental social housing and affordable housing, a differentiation that is not made at the national level and introduces a sub-type of affordable housing, which is little documented in current research and is here termed ‘self-help affordable housing’. The paper looks at the legacy of socialist housing and social housing before and after the crisis. It makes an important claim that needs further investigation: current social housing provision in Romania overlooks the poorest households. This has implications for the country’s political leadership; the capacity for financial and institutional innovation; and wider strategies for policy integration.

24.12.2017 | Catalina Turcu | Volume: 4 | Issue: 2 | Pages: 54-66 | 10.13060/23362839.2017.4.2.386
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