Transformation of the housing sector in Poland and Hungary

Waiting times for obtaining a state-provided apartment still range from 15 to 30 years in Poland and from 4 to 10 years in Hungary. This report describes and contrasts the housing sectors of the two countries in their demographic and economic contexts, and assesses the needed levels of technical assistance and training. In terms of housing finance, Hungary"s financial markets are more developed, making it possible for financial institutions to raise funds by selling debt instruments in the capital market; neither country, however, has yet to achieve market interest rates in the housing sector. In regard to construction, the most striking difference between the two countries is that Hungary"s urban residential construction industry is dominant, while Poland"s is only nascent. Poland also faces more serious problems regarding the availability of building materials and construction equipment. On the positive side, owner-occupied housing now appears to exchange openly and at market rates in both countries -- a major change in the past two years. The efficiency with which the market operates can clearly be improved, but this is likely to happen in due course as more brokerage services and better information develop. Moreover, mortgage finance, at least with moderate loan-to-value ratios, appears to be generally available, although it is expensive and competition among lenders is very limited. In the rental market, while deep subsidies remain, both countries are moving to reduce them.