Hungary stepped on a very specific path two years into the Global Financial Crisis and the recession in its wake, on which it replaced ‘traditional’ austerity programs with ‘unorthodox’ economic policy. This policy paradigm shift affected the emerging social housing policy in two respects. First, the mainstream approach to social problems related to worsening housing affordability (due to increased loan repayments and other cost items together with decreasing incomes) provided strong support for the middle class. Second, intervention toward low income households remained minimal, and served only to pacify political tensions. This dual approach characterized the policy of the government, and resulting shift in the social structure did not necessarily follow the direction policy makers intended. Programs aimed at the middle class were poorly targeted, and often helped the upper middle class the most, who again did not behave the way policy makers expected (which would have been increased consumption to stimulate economic growth). Programs aimed at low income groups rendered the social structure more rigid, decreased the chance of low income persons to escape from extreme poverty, and cemented the opportunity discrepancies between the rich and the poor. The most recent housing policy measures suggest that the mistakes committed in the 2000s will likely be repeated, and there are not measures in place which could correct their course.
This paper looks at housing strategy in a wider social and economic context and argues that a household’s (class) position in society depends on important life decisions, one of the most important of which is a person’s employment strategy and preparation for the period of retirement (pensions), which is related to housing decisions. The main context of these decisions is the welfare regime, but also a country’s economic structure (varieties of capitalism) and housing system (tax and subsidy elements of programmes). However, as the paper argues, these systems are also changing in relation to the macro effect of individual decisions.
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.
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.