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Housing Markets and the Global Financial Crisis

Housing Markets and the Global Financial Crisis

The Uneven Impact on Households

Edited by Ray Forrest and Ngai-Ming Yip

Housing markets are at the centre of the recent global financial turmoil. In this well-researched study, a multidisciplinary group of leading analysts explores the impact of the crisis within, and between, countries.

Chapter 7: Housing Policy and the Economic Crisis – The Case of Hungary

József Hegedüs

Subjects: economics and finance, financial economics and regulation, geography, human geography, politics and public policy, public policy, social policy and sociology, comparative social policy, economics of social policy, sociology and sociological theory, urban and regional studies, urban studies


József Hegedüs INTRODUCTION The world economic crisis has also reached the new member states of the EU, resulting in a serious economic shock for some of them because of the fiscal mismanagement at the beginning of 2000 (Mitra et al., 2010). These countries are the ‘weakest links’ of the extended EU. Hungary was one of them, which in 2002 and 2003 introduced measures to improve the living standards of the population without a strong economic foundation. By 2006, the public-sector deficit went above 9 per cent of GDP, the external debt increased to 65 per cent of GDP and the current account deficit was 7.4 per cent, because of these massive imbalances. Thus the Hungarian economy had become very vulnerable to the global financial crisis, and Hungary needed an IMF US$ 25 billion special loan to manage the attack against its national currency. Housing policy has contributed to the economic problems through the immense homeownership support started in 2001/02, which resulted in an exceptionally fast increase of the housing-mortgage sector and households’ indebtedness. As a consequence of the economic crisis, a sharp drop in housing investment took place, house prices decreased and a mass of housing evictions has been forecast, entailing serious social conflicts. Will it indeed happen, and, if yes, what consequences will it have for the new housing system that has emerged since the great political transition of 1989/90? Beyond this direct social issue there is a more theoretical question related to the discussion on typology...

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