The crisis of housing-finance schemes in Hungary in the 1990s
Analysing the processes influencing supply and demand on the housing market the paper provides explanations for the crisis situation in housing-finance in Hungary in the 1990s.
In the highly developed economies housing investments are financed by loans to the extent of 60-80%. However, in Hungary housing loans nearly disappeared in the 1990s, and they were replaced predominantly by household’s savings. This study focuses on the determining factors of the crisis of housing-finance in Hungary. According to the authors the crisis situation can be explained mainly by factors on the demand side. Due to macroeconomic changes real income of households decreased in the 1990s, and demand for new housing also fell. The paper gives evidence about the relevance of the macroeconomic environment on the housing market of Hungary.
In the course of analysis, in addition to the deteriorating income position of households two factors were determined by the authors that seemed to have strong influence on the development of housing market in Hungary in the 1990s. Namely, the general loss of value of real-estate stock and the high real rate of interest on loans. The combined negative impacts of these two factors could not be counterbalanced by the newly introduced housing finance-schemes. The analysis comes to the conclusion that the possible solution for the crisis can be the improvements of macroeconomic conditions.
Városkutatás Kft. Budapest
Mr József Hegedüs
Mr József Hegedüs – Mrs Éva Várhegyi
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