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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

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

Housing Market Access in the Lisbon Metropolitan Area: Between the Financial and the Pandemic Crises

Housing Market Access in the Lisbon Metropolitan Area: Between the Financial and the Pandemic Crises

The Portuguese housing market underwent major transformations between 2010 and 2020. Until then, a delicate but resentful stability had long existed, with distorted rent schemes and low annual price increases proportional to the national economy and the income of the Portuguese population. After the financial crisis, several internal and external variables converged to dramatically change this scenario. In recent years, a growing number of researchers have centred their attention on the difficulties that the Portuguese urban middle-class populations are facing in trying to find homes. This paper analyses these challenges and their impact quantitatively, focusing on the affordability of housing for purchase or rent and considering synthetic indicators for average household incomes in the Lisbon Metropolitan Area between the beginning of 2016 and the end of 2019. The results show that the cost of buying or renting a house in the main Portuguese urban system has become much more detached from local incomes. The article concludes with reflections on the structural reasons for the enduring inequalities in the housing markets and the difficulties recognising territorial cohesion and spatial justice as important elements shaping urban and housing policies in Portugal.

24.11.2020 | Gonçalo Antunes, João Seixas | Volume: 7 | Issue: 2 | Pages: 58-72 | 10.13060/23362839.2020.7.2.515

Financialised Privatisation, Affordable Housing and Institutional Investment: The Case of England

Financialised Privatisation, Affordable Housing and Institutional Investment: The Case of England

Historically, public and affordable housing has been provided by the state in close conjunction with local authorities, public housing developers, and other social housing providers. Yet, affordable rental homes are now increasingly being managed, produced, or acquired by private equity firms and other institutional investors. In this contribution, we argue that ‘financialised privatisation’ is a helpful concept for understanding these shifts in state-finance compromises within the post-crisis affordable housing sector. Drawing on the case of England, we first discuss the major mechanisms of financialised privatisation and examine how an increasingly polymorphous affordable housing sector has emerged with a focus on multi-tenure and mixed-income housing tenures. We then discuss the possible challenges of this transformation and conclude that it remains very much a question whether a privately funded housing system will emerge that provides genuinely affordable housing and reduces inequalities.

29.5.2020 | Gertjan Wijburg, Richard Waldron | Volume: 7 | Issue: 1 | Pages: 114-129 | 10.13060/23362839.2020.7.1.508

Subsidised Housing? The Paradoxical Imaginaries of Finnish Non-Profit Rental Housing

Subsidised Housing? The Paradoxical Imaginaries of Finnish Non-Profit Rental Housing

As a developed welfare state, Finland has a long history of and continuing political support for housing policies, ranging from non-profit rental housing to owner-occupied housing supported by tax deductions. The current neoliberal critique, however, has questioned the efficiency and moral foundations of the established policies. This critique has taken as its target the difference between market rents and non-profit rents, citing this as an instance of ‘alternative costs’ for the city and, as such, as a form of subsidy that is unjustly distributed. However, the full picture of different housing subsidies – including those received by owner-occupiers – is not usually considered.  The paper concludes that the current debate does not take into account the ways in which different subsidies interact in the approaches used to provide affordable housing in the Helsinki Metropolitan Area. As such the critique becomes tacitly political, although it is represented in terms of rationality and justice.

28.5.2020 | Johanna Lilius, Kimmo Lapintie | Volume: 7 | Issue: 1 | Pages: 130-139 | 10.13060/23362839.2020.7.1.509
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

A Tale of two Busts (and a Boom): Irish Social Housing before and after the Global Financial Crisis

A Tale of two Busts (and a Boom): Irish Social Housing before and after the Global Financial Crisis

This article examines the marked decline in Irish social housing’s traditional role as the main source of accommodation for low-income households. We argue that although this policy redirection has become clearly apparent in the context of the Global Financial Crisis; its roots are, in fact, much older. They lie, not in Ireland’s most recent fiscal crisis, but in the last one which occurred between the late 1970s and mid-1980s. Changes made to arrangements for funding social housing during this time effected a long-term contraction in the social housing’s contribution to total housing output which, in turn, precipitated growing reliance on housing allowance subsidised private rented housing to accommodate this group.  The post-GFC austerity merely accelerated this long-term trend rather than signalled a new policy direction.

27.12.2017 | Michelle Norris, Michael Byrne | Volume: 4 | Issue: 2 | Pages: 19-28 | 10.13060/23362839.2017.4.2.383
Social Housing after the GFC: Further Evidence

The French Social Housing Sector at the Crossroads of Budgetary Constraints and Social Missions

The French Social Housing Sector at the Crossroads of Budgetary Constraints and Social Missions

France has a high rate of production of new housing and the Global Financial Crisis has had little impact on a country of fixed-rate housing loans and strong guarantees for home-buyers. At the same time, the social rental sector, managed by a powerful network of public and private (not-for-profit) companies, has greatly increased its housing production thanks to the use of a financial mechanism that is independent of mainstream finance. Housing should be easily available throughout France. But this is not the case in the capital region and for some disadvantaged households. Critics regularly speak out against the deficiencies of French housing policies. Opponents of increased public spending consider that too much public money is being spent on this, while supporters of the free market say that the legal and institutional framework hinders private initiatives. Advocates of homeless people and low-income groups complain about the high cost of housing and segregation processes. This paper presents the debates and discussions regarding the pros and cons of housing policies in France at a time of severe budgetary constraints.

26.12.2017 | Jean-Pierre Schaefer | Volume: 4 | Issue: 2 | Pages: 29-38 | 10.13060/23362839.2017.4.2.384
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: New Trends across Europe

Social Housing Models: Past and Future

Social Housing Models: Past and FutureThis paper looks at the rationale for social housing; examines the models that have been used in Europe over the last century and how social housing might be maintained into the future.
28.6.2017 | Christine Whitehead | Volume: 4 | Issue: 1 | Pages: 11-20 | 10.13060/23362839.2017.4.1.320
Social Housing after the GFC: New Trends across Europe

Social Housing in England: Affordable vs ''Affordable''

Social housing in England: Affordable vs ''Affordable''England''s increasing housing affordability problem, widely described as a ''housing crisis'', has become a major public and political concern in recent years. The proportion of social housing has been shrinking for 40 years but there is no political appetite—at least under the current government—to reverse this. Policies are instead addressed at making some private housing more affordable and at increasing access to owner occupation by allowing more social tenants to buy their homes. The government has increased its control over the financial affairs of social landlords, who are responding by concentrating on those areas of activity where control is less stringent.
27.6.2017 | Kathleen Scanlon | Volume: 4 | Issue: 1 | Pages: 21-30 | 10.13060/23362839.2017.4.1.321

Housing as Asset Based Welfare: A Comment

Housing as Asset Based Welfare: A Comment

This paper aims to provide a contribution to the debate about housing as asset based welfare begun in this journal in 2015. It suggests that there are strong reasons associated with life cycle earnings and consumption why owner-occupation can be a desirable option, especially for older households. However owner-occupation can be a high risk option for less well-off households while increasing both inequality across income groups and particularly through its impact on inter-generational income and wealth. Even so, housing inequalities, despite all the market failures associated with its provision and allocation, are more an outcome of broader economic fundamentals. Moreover housing policies can improve the lived experience for many. Policies should aim to provide a tenure neutral-taxation environment but also to reduce credit and other constraints to entering owner-occupation. At the same time there must be support for those with inadequate income to achieve acceptable housing standards.

28.6.2016 | Christine Whitehead | Volume: 3 | Issue: 1 | Pages: 10-18 | 10.13060/23362839.2016.3.1.249
Special issue on Housing Asset-Based Welfare

Homebuying: a Critical Perspective on Financial Costs and Gains

Homebuying: a Critical Perspective on Financial Costs and Gains

In Britain, the shift from the ideology of homeownership into one of homeownership-based welfare has been sustained by homebuyers being regarded as investors. Homeowners are expected to create a synergy between the owned house seen as a space of shelter, place of home and increasingly, an investment vehicle and an object of debt. Drawing on 80 interviews with owner-occupiers and national data on house prices and mortgages, we examine the way in which the meanings of home meanings are negotiated through the subjective calculation of the financial costs and gains of homebuying. We explore homebuyers’ debt amnesia, their miscalculation of gains and their disregard of inflation. However homebuyers’ financially unsophisticated understanding of the asset-home arises less from book-keeping complexities or difficulties in pricing the emotional domain of the home, but rather by them instinctively considering the alternative cost of a rented space of shelter. From this financial perspective and given affordability, homebuying illustrates a misleading ideological notion of choice.

24.6.2015 | Adriana Mihaela Soaita, Beverley Ann Searle | Volume: 2 | Issue: 1 | Pages: 65-73 | 10.13060/23362839.2015.2.1.177

The Housing Market Reform Agenda: A Review of a Recent Housing Policy Document in the Netherlands

The Housing Market Reform Agenda: A Review of a Recent Housing Policy Document in the Netherlands

The Dutch Cabinet published its Housing Market Reform Agenda on 17 September 2013. This paper describes the main features of the Agenda and presents an ex-ante evaluation of this policy document. The introduction of a landlord levy is one of the biggest inconsistencies in this Agenda. The Housing Market Reform Agenda is particularly critical of housing associations. There are good reasons to throw away the bath water, but the baby (= the housing association) should be nurtured.

29.1.2014 | Hugo Priemus | Volume: 1 | Issue: 1 | Pages: 9-16 | 10.13060/23362839.2014.1.1.25
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