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“Unorthodox” Housing Policy in Hungary: Is There a Way Back to Public Housing?

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The Future of Public Housing

Abstract

The global economic crisis had a severe impact on the Hungarian economy at the end of 2008 due to the high public deficit and large FX debt/GDP ratio. Hungary had to take out emergency loans from the IMF and introduced measures such as cutting government expenditures (housing subsidies, pensions, etc.) and levying special taxes. The interim Hungarian government launched an austerity program that consolidated the budget and brought down the deficit to 3.8 % of GDP by 2009. After the election in 2010, the new government, which received 53 % of the votes and has two-thirds majority in Parliament, introduced “unorthodox” economic measures, provoking widespread discussion and criticism both in Hungary and abroad. The economic basis of this policy is a modified neo-Keynesian economic policy that tries to boost economic growth through state expenditures or tax cuts. The “unorthodox” economic policy aims to restore economic growth and fiscal balance without austerity measures.

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Notes

  1. 1.

    The main characteristics of the East European Housing Model were: one-party political control over the housing sector, the subordinate role of market mechanisms; the absence of market competition among housing agencies (bureaucratic coordination), and a broad control of the allocation of housing services (huge, nontransparent subsidies). However, under this model, several “sub-models” (versions) emerged; these were the responses of individual countries to particular challenges in the development process of the socialist economy (Hegedüs 2013c).

  2. 2.

    See the social aspects of the programs in Hegedüs and Somogyi (2005) and the technical description in Szalay and Tóth (2003).

  3. 3.

    There is another program for households who have taken out FX loans of less than HUF 20 million and have arrears of more than 90 days. Such borrowers have the possibility to convert their loans into HUF loans with a 25 % deduction. They were allowed to apply until August 31, 2012. However, it seems that only a limited number of borrowers would have chosen this option because the payment after conversion would remain higher than what most of them could afford to pay.

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Authors and Affiliations

  1. Metropolitan Research Institute, 1093 Lónyay 34, Budapest, Hungary

    József Hegedüs Ph.D. (Managing Director)

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  1. József Hegedüs Ph.D.
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Correspondence to József Hegedüs Ph.D. .

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Editors and Affiliations

  1. School of Public Economics and Administration, Shanghai University of Finance and Economics, Shanghai, People's Republic of China

    Jie Chen

  2. School of the Built Environment, Heriot-Watt University, Edinburgh, United Kingdom

    Mark Stephens

  3. College of Urban and Environmental Sciences, Peking University, Beijing, People's Republic of China

    Yanyun Man

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Hegedüs, J. (2013). “Unorthodox” Housing Policy in Hungary: Is There a Way Back to Public Housing?. In: Chen, J., Stephens, M., Man, Y. (eds) The Future of Public Housing. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-41622-4_16

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  • DOI: https://doi.org/10.1007/978-3-642-41622-4_16

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