Habitat for Humanity Hungary presented its annual housing report for the seventh time. The report found that there are between two and three million people in Hungary who are experiencing different forms of housing poverty, among the tenants, who are in a particularly insecure position. The intertwining aspects of housing poverty create a vicious circle, affecting low-income households for whom it has become increasingly difficult to get out from the housing poverty trap.
Habitat for Humanity Hungary has created its seventh yearly report about housing poverty – for the first time in a new, innovative format. Created in partnership with the Periphery Research Institute (Periféria Kutatóközpont), the report aims to present housing problems in a more understandable way through using various online tools. According to our hopes, the interactive figures and the richer visual display help those interested in the topic of housing to get a complex picture.
Apart from outlining the main dimensions of housing poverty, the report also presents three longer analyses about some of the most concerning issues related to housing in Hungary today. This includes an analysis of the lower segment of the rental market, and two analyses due to be published later about indebtedness related to housing and about the spatial inequalities within the country. Similarly to previous years, one of the most important statements of the 2018 housing report is that the housing crisis is increasingly deepening in Hungary. Moreover, due to the low quality of the domestic housing stock, high utility costs and energy poverty represent serious problems. Although the central government has increased the funds allocated for housing in the last several years, this has mainly benefitted middle and upper-middle classes as the amount of non-needs-based benefits is nine times higher than that of needs-based.
Millions of people in housing poverty
Similarly to last year, the report considered those living in housing poverty as suffering from disadvantages in the fields of affordability, housing quality, energy efficiency, spatial position and legality. A household living in housing poverty is most likely to be deprived in several of these areas, and according to our careful estimation there are between 2 and 3 million people affected in Hungary by at least one of the four housing problems.
Today there are 1.5 million people in Hungary who live in low-quality housing. In most cases, these people do not have the resources to renovate the crowded, wet or moisty flats. In a country where approximately 80% of the 4.4 million real estates do not meet the modern energetic and technical criteria, the physical characteristics of buildings have a strong negative effect on the housing costs and the quality of life of the majority of people.
Every third household is suffering from affordability problems and spends a huge share of its monthly income on utilities, rent and loan repayment, among other reasons because of the bad physical quality of the buildings. A further indicator of affordability problems related to housing in the last decade has been the level of indebtedness of Hungarian households. Currently, 13% of households are in more than 60-days arrears with their utility payments, while there are 750.000 households subjected to the procedure of compulsory execution with their debt worth 7% of the Hungarian GDP. These facts explain – but do not justify – why there are on average more than a dozen evictions per day, and clearly show that the (foreign currency) loan crisis is far from being solved.
There is no way out from the housing poverty trap
The intertwining aspects of housing poverty create a vicious circle that we can call a housing poverty trap. Those who are born into the housing poverty trap or fall into it have a very difficult time to get out. Households with lower income are deprived in all dimensions: they are more affected by energy inefficiency, are more likely to live in areas which lack basic services and their housing status is more legally insecure.
The housing poverty trap creates clearly identifiable spatial patterns. While there is a constant appreciation of real estate in Budapest, in the inner neighbourhoods of big cities and in popular holiday destinations, other parts of the country show different tendencies. All around the country tens of thousands of people are pushed out into peripheral locations, and other hundreds of thousands are being trapped in these locations, for example in outskirts, rural allotment garden areas and small rural settlements.
“Data about housing for 2017 and the first half of 2018 as well as our own experiences through our work do not indicate any positive changes within the governmental responses to the housing problems. There is no governmental will to create a comprehensive housing policy which would be able to coordinate housing issues currently fragmented among different ministries and which would efficiently address social inequalities.” said Zsolt Szegfalvi, the executive director of Habitat for Humanity Hungary. He also added that “there are no signs indicating any increase in state resources channelled into needs-based housing subsidies or into programs aiming to fight the processes leading to homelessness. Due to the lack of country-wide preventive solutions and a social safety net lower-income households and individuals are in increasing danger of losing their homes in case of a divorce, an accumulated debt, or even because of a temporary illness or a job-loss. In bigger cities or in Budapest regaining the possibility of housing is almost impossible for people in difficult financial situation.”
“Usury rentals” and families migrating between temporary shelters
One of the highlights of this year’s report is the lower segment of the Hungarian rental market, which shows worrisome tendencies. Rental prices in Hungary have skyrocketed in the last years, with a 75% increase nationwide between 2010 and 2016, and the rise in prices has not stopped since then either (Jófogás 2018). The average rental price of smaller apartments is even higher: while in 2010 the average rent for a 30 m² studio apartment was around 45.870 forints a month, today on average the same apartment would cost 85.000 forints.
In the meantime the average income of the lowest income decile – 10% of the population with the lowest income – has not increased to such an extent. Within the lowest income decile the per capita annual average income rose by 11.4%, while rental prices rose by 75% in the same period. These are the households most in need of affordable and durable non-market housing solutions. However, without such solutions existing and pushed out from market rental housing, they are usually forced into institutions offering temporary shelter or into expensive, insecure and exploitative housing solutions, such as the increasingly common “usury rentals”. Instead of these low quality and insecure alternatives we believe that a socially targeted rental subsidy and the development of social housing could offer a liveable and sustainable solution for those living in market rentals and those being pushed out from them.