Abstract

In Hungary's housing system, home ownership has become the dominant tenure, covering 85%–90% of the housing stock after the first decade of intensive privatisation in the 1990s. Mortgage loans were heavily subsidised between 2000 and 2004 as a part of pro-homeownership housing policy. After cutting the subsidies in 2004 (as the cost of the subsidy programme was unsustainable), the tenure preferences of households have not changed: the low interest rate, high risk foreign exchange mortgage became the typical loan product. After 2008 the housing and mortgage market collapsed: new construction decreased by 70%--80%, housing transactions plummeted, house prices decreased and mortgage arrears become a huge social problem. The mortgage crises proved that homeownership could be as risky and unpredictable as renting. It is expected that there will be a shift in tenure choice as a consequence of the mortgage crisis. The paper sets out to assess if stakeholders in the housing sector (households, government, banks, etc.) will learn from these experiences, and start showing a stronger preference and support for renting, which could result in a more balanced tenure structure and more stable housing system.

Keywords: home ownership, tenure choice, GFC (Global Financial Crisis)