Housing Policy Reforms in Post Socialist Europe: Lost in Transition

272 Pages·2009·3.78 MB·English

by  Prof. Dr. Sasha Tsenkova (eds.)

Housing Policy Reforms in Post Socialist Europe
Sasha Tsenkova
Housing Policy Reforms
in Post Socialist Europe
Lost in Transition
Physica-Verlag
A Springer Company
Prof. Dr. Sasha Tsenkova
University of Calgary
Faculty of Environmental Design
2500 University Drive NW
Calgary, Alberta, Canada
T2N 1N4
[email protected]
ISBN 978-3-7908-2114-7 e-ISBN 978-3-7908-2115-4
DOI: 10.1007/978-3-7908-2115-4
Contributions to Economics ISSN 1431-1933
Library of Congress Control Number: 2008936409
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Preface and Acknowledgements
The transition from a centrally planned to a market-based economy in Central and
Eastern Europe has been one of the fundamental transformations of the 1990s. The
‘shock therapy’ effectively dismantled the state-owned economy and state institu-
tions. The profound transformation no doubt has major economic, social and politi-
cal implications for post-socialist societies and is reflected in the restructuring of
national housing systems.
The purpose of this book is to explore both theoretically and empirically the
impacts of housing reforms on housing system performance in post-socialist coun-
tries. In exploring this phenomenon, it views housing systems as a set of institutions
organised in the process of promotion, production, allocation and consumption of
housing as socially embedded in political, social and economic contexts. The work,
based on a comparative analysis of housing policy reforms in nine countries in
South East Europe, seeks to identify major patterns of change in the housing sys-
tems in the context of the transition from planning to markets. The conceptual
framework for this comparative evaluation is designed to offer insights into policy
intervention to achieve more efficient and equitable performance of housing sys-
tems. Although housing policy in the region was ‘lost’ in multiple transitions, the
book argues for more strategic policy reforms that enable market institutions to
work more efficiently in national and local contexts.
The book draws on a comparative study on Trends and Progress in Housing
Reforms in South East Europe commissioned by the Council of Europe Development
Bank. The author gratefully acknowledges the financial support for the study as
well as the assistance of the Council of Europe, the United Nations Economic
Commission for Europe and the Norwegian Ministry of Foreign Affairs for this
research. My special thanks to colleagues from the Council of Europe Development
Bank and to Dr. Niels Peter Thomas, Editor of Business/Economics, from Springer
for their insightful comments on the earlier version of this manuscript. The award
of a Killam Fellowship for Canadian scholars provided some unique opportunities
for further research in 2007 and made the completion of this book possible.
The nature of international research necessitates collaboration with colleagues.
Members of the Council of Europe Housing Expert Network were instrumental in the
process, assisted with administration of the surveys and provided constant feedback.
A number of researchers, developers, bankers, housing managers and policy makers
v
vi Preface and Acknowledgements
shared information, publications and their experiences during my field work in South
East Europe. I thank them all for their very professional assistance and input.
The author and publishers are grateful to the Council of Europe Development
Bank for permission to adapt and modify copyright material. The findings, inter-
pretations and conclusions expressed here are those of the author and do not neces-
sarily reflect those of the Council of Europe Development Bank who cannot
guarantee the accuracy of the data included in this study.
November 2008 Dr. Sasha Tsenkova
Contents
Preface and Acknowledgements .................................................................... v
List of Figures.................................................................................................. xiii
List of Tables ................................................................................................... xvii
1 Introduction: Conceptual Framework for Comparative Analysis ..... 1
1.1 Introduction ........................................................................................ 2
1.2 Major Themes in the Literature on Post-Socialist
Housing Systems ................................................................................ 5
1.3 Conceptual Framework ...................................................................... 9
1.4 Analytical Model: Performance and Policy Outcomes ..................... 13
1.4.1 Fiscal Policies ....................................................................... 15
1.4.2 Financial Policies .................................................................. 15
1.4.3 Housing Market Policies ....................................................... 16
1.5 Housing System Performance Indicators ........................................... 16
1.5.1 Distributional Efficiency ....................................................... 17
1.5.2 Improvement of Housing Quality ......................................... 17
1.5.3 Stability in Housing Investment and Production .................. 17
1.5.4 Differentiation of Prices and Rents ...................................... 18
1.5.5 Affordability and Choice ...................................................... 18
1.6 Research Methodology ...................................................................... 18
1.6.1 Review of the Literature ....................................................... 19
1.6.2 Surveys and Field Work ........................................................ 19
1.6.3 Comparative Evaluation and Validation ............................... 20
1.7 Scope and Content of the Book ......................................................... 20
2 The Legacy of Socialist Housing Systems .............................................. 25
2.1 The Legacy of the Socialist Model of Development ......................... 25
2.2 The Socialist Housing Policy ............................................................. 27
2.2.1 The Legacy of the Socialist Housing Model ........................ 28
2.2.2 Housing Policy Reforms ....................................................... 30
2.3 The Socialist Housing Systems: Performance and Outcomes ........... 33
vii
viii Contents
2.3.1 Housing Conditions .............................................................. 33
2.3.2 Forms of Housing Provision ................................................. 37
2.3.3 Tenure Structure and Property Rights .................................. 42
2.3.4 Housing Costs and Affordability .......................................... 44
2.4 Crisis and Transition in the Housing System .................................... 46
3 Political, Social and Economic Transitions ........................................... 51
3.1 External Factors Influencing the Performance
of Housing Systems ........................................................................... 51
3.1.1 The Political Transition ........................................................ 51
3.1.2 The Economic Transition, ..................................................... 53
3.1.3 The Social Transition ............................................................ 58
3.2 Concluding Comments ....................................................................... 62
4 Housing Policy Reforms in South East Europe .................................... 65
4.1 Major Housing Policy Developments:
Challenges and Opportunities ............................................................ 65
4.1.1 The First Phase of Housing Reforms ................................... 65
4.1.2 The Second Phase of Housing Reforms ............................... 68
4.1.3 Progress in Housing Reforms ............................................... 70
4.2 Institutional Reforms: Privatisation and Private Sector Growth ........ 72
4.2.1 Public Sector Institutions in Housing Provision ................... 73
4.2.2 Private Institutions in the Provision of Housing ................... 77
4.2.3 Non-Government Organisations and
Housing Market Intermediaries ............................................ 80
4.3 Reforms of the Legal Framework for Housing .................................. 81
4.3.1 Property Rights Legislation .................................................. 82
4.3.2 Legislation on Housing Loans and Mortgages ..................... 85
4.3.3 Legislation on Housing Privatisation .................................... 86
4.3.4 Legal Framework for Apartment Ownership
and Management ................................................................... 87
4.3.5 Legislation on Construction and Planning............................ 88
4.3.6 Taxes and Transaction Fees .................................................. 89
4.4 Institutional and Legal Reforms: Concluding Comments ................. 90
5 Government Support for Housing .......................................................... 91
5.1 Fiscal and Financial Instruments to Support
Access to Affordable Housing ........................................................... 91
5.2 Direct Public Provision of Homeownership Housing ........................ 93
5.3 Demand-Based Assistance to Homeowners ...................................... 95
5.4 Provision of Public/Social Rental Housing ....................................... 97
5.5 Housing Assistance to Low Income Households
in the Rental and Owner Occupied Sector ........................................ 100
Contents ix
5.6 Housing and Refugee Related Issues in the Region .......................... 100
5.6.1 Housing Programmes in Bosnia-Herzegovina ...................... 101
5.6.2 Housing Programmes in Croatia ........................................... 104
5.6.3 Housing Programmes in the Former Yugoslav
Republic of Macedonia ......................................................... 106
5.6.4 Housing Programmes in Serbia and Montenegro ................. 106
5.7 Refugee-Related Housing Programmes in Kosovo/UNMIK ............. 108
5.8 Concluding Comments ....................................................................... 110
6 Housing Systems: Performance Challenges .......................................... 113
6.1 Assessment of Housing Distribution in the Region ........................... 113
6.2 Improvement in Housing Quality: Regional Challenges ................... 117
6.2.1 Access to Technical Infrastructure........................................ 117
6.2.2 Deteriorating Quality of Existing Housing ........................... 118
6.2.3 Substandard Housing ............................................................ 123
6.3 Tenure Structure and Housing Choice ............................................... 123
6.4 Housing Investment and New Housing Construction ........................ 128
6.4.1 Trends in New Housing Construction .................................. 128
6.4.2 Informal Housing .................................................................. 130
6.4.3 Constraints for New Housing Development ......................... 131
6.5 Affordability of Housing .................................................................... 132
6.5.1 Income Differentiation .......................................................... 132
6.5.2 Housing Costs ....................................................................... 133
6.5.3 Prices in Emerging Housing Markets ................................... 133
6.6 Concluding Comments ....................................................................... 138
7 Housing Privatisation, Housing Management
and Public Housing .................................................................................. 139
7.1 Privatisation and Housing Management:
A Troubled Relationship .................................................................... 139
7.1.1 The Institutional Framework for
Housing Management ........................................................... 140
7.1.2 The Evolving Legal Framework for
Housing Management ........................................................... 142
7.1.3 The Triple Challenge for Asset Management....................... 145
7.2 Public Rental Housing: Challenges and Future Prospects................. 150
7.2.1 Regional Perspective on Public Rental Housing .................. 151
7.3 Changing Institutional Context .......................................................... 152
7.3.1 Rent Setting........................................................................... 153
7.3.2 Allocation .............................................................................. 153
7.4 Financial Support for Public Housing ............................................... 154
7.5 Maintenance Practices ........................................................................ 156
7.6 Conclusion .......................................................................................... 156
x Contents
8 Housing Finance and New Housing Provision ...................................... 159
8.1 Bridging the Gap: Developments in Housing Finance ...................... 159
8.1.1 Overview ............................................................................... 160
8.1.2 Banking Reforms .................................................................. 160
8.1.3 The Primary Mortgage Market ............................................. 162
8.2 Mortgage Lending .............................................................................. 165
8.3 Constraints for Mortgage Lending ..................................................... 168
8.3.1 Interest Rate Spread .............................................................. 168
8.3.2 Conservative Approach to Lending ...................................... 168
8.3.3 Affordability Constraints ...................................................... 169
8.3.4 Lack of Construction Lending .............................................. 170
8.4 The Housing Industry in Transition ................................................... 170
8.4.1 Privatisation of Construction Enterprises ............................. 170
8.4.2 Private Housebuilders ........................................................... 171
8.5 The Transition in New Housing Provision ........................................ 172
8.5.1 Forms of New Housing Provision ........................................ 173
8.5.2 Quality and Costs in New Housing Provision ...................... 177
8.6 Economic and Social Efficiency of Private Housebuilding ............... 179
8.6.1 Economic Efficiency ............................................................. 179
8.6.2 Social Efficiency of Private Housebuilding .......................... 182
9 The Transition in Housing and Informal Settlements .......................... 187
9.1 Informal Housing and Informal Settlements in
South East Europe .............................................................................. 187
9.1.1 Definitions ............................................................................. 187
9.1.2 Spatial Manifestation and Formation Processes ................... 189
9.1.3 Settlements for Vulnerable Groups ....................................... 191
9.1.4 Location and Size ................................................................. 194
9.2 The Challenges of Informal Housing ................................................ 194
9.2.1 The Economic Challenges .................................................... 196
9.2.2 The Social Challenges .......................................................... 198
9.2.3 The Environmental Challenges ............................................. 199
9.3 Policy Solutions ................................................................................. 201
9.3.1 Legalization ........................................................................... 202
9.3.2 Regularization and Upgrading .............................................. 203
9.3.3 Resettlement .......................................................................... 203
9.4 Informal Housing as a Problem and a Solution ................................. 205
10 The Transition in Housing and Nations of Homeowners ................... 209
10.1 Lost in Transition: Housing Policy in South East Europe ............. 209
10.2 Evaluation of Housing Policy Reforms ......................................... 211
10.2.1 The Second Phase of Housing Reforms .......................... 211