Strategies to Address the Housing Crisis in Budapest

The Hungarian capital faces a severe housing crisis as skyrocketing real estate prices combine with a shortage of municipal housing to become one of the most pressing concerns for residents. With rents rising much faster than incomes, people need help to afford a place to live. This has become a severe concern for those living in low-income families and those working hard to climb the middle-class ladder. This situation has led many people to move to the outskirts of Budapest, where housing costs are less expensive, while still commuting to the city center for work and services. Check out the Best info about Housing Crisis in Budapest.

The city’s mayor and council know the need to address this issue and are looking at ways to improve hostel standards and reduce homelessness. They strongly desire to reject the criminalization of street homelessness and, instead, seek to find ways to offer more affordable rental accommodation for the most vulnerable. The Covid-19 pandemic has given new impetus to this goal, with the Municipality introducing a range of additional city-wide measures early on, including a moratorium on evictions. At the same time, a conference held in February 2020 by the municipality and civil society groups explored solutions for those living on the streets.

Hungarians spend an average of 22 percent of their income on housing. However, the rate is much higher for those on lower incomes. Households on the bottom quartile of the wage scale spend more than 35 percent of their income on housing. This is because most of the country’s housing stock consists of private sector rental property, which has seen prices rise significantly in recent years compared to household incomes, as well as interest rate cuts fuelling demand from investors and increasing materials and construction labor costs.

In the past 30 years, Hungary has experienced the second steepest increase in house prices of any OECD member state, and Budapest is no exception. In a city such as Budapest, where 89% of the housing stock is owned by the Municipality (with only about 7-8% in municipal rental and 1.5% in privately-owned properties), rising prices will disproportionately affect those on lower incomes, especially since most of these households are not eligible for subsidy schemes that help them buy a home.

A solution to the problem is desperately needed. A national policy is needed that reflects economic realities and takes a social perspective into account. “The lack of a proper housing policy contradicts the common sense of economic rationality and constantly worsens the socioeconomic divide,” says Balint Misetics, chief housing advisor to Budapest’s mayor.

A solution will require a concerted effort by all stakeholders, from the government and other public institutions to private businesses and foundations, NGOs, and those living on the streets. The seminar in February showed that by adopting a long-term approach, setting clear goals, and involving all those affected by the housing crisis, a system could be put in place to reduce street homelessness and provide affordable housing.

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