Housing Finance in Transition Economies


March 2002

The development of housing finance markets is a dual-dimensional policy issue. On the one hand, a well-developed housing finance system is a quintessential element of the housing policy of a market-based economy. People need reasonable financial arrangements for the construction and acquisition of a dwelling, normally a very costly undertaking relative to an individual's income. Increasing the availability of such financing is an important objective of a housing policy, itself a critical part of a social policy which aims to satisfy the basic needs of the population. On the other hand, the housing finance market represents a significant segment of the financial sector. Not only does it constitute the major part of consumer credit, but it can also initiate the establishment of market based financial instruments, as has been observed in many advanced market economies. An efficient housing finance policy is pivotal for the development of a comprehensive financial system.

The establishment of a well-functioning housing finance system has emerged as an important and urgent policy requirement of transition economies. During the last decade of economic transformation, governments have stepped away from their role under the former economic system as the purveyors of housing for their populations. The privatisation of dwellings has already been carried out in most central and eastern European countries. However, private sector construction and transaction of residences has yet to develop. A situation which can be partly attributed to the lack of effective housing finance mechanisms.

In response to the keen interest among many transition countries and major donors in developing an operational housing finance system in these economies, the OECD held a workshop on the subject in Paris on 19-20 June 2000. It was organised under the framework of its Centre for Co-operation with Non-Members with the co-sponsorship of the Government of Japan. The workshop provided a valuable opportunity for officials and experts to exchange views and experiences on the subject.

This publication consists of a summary of the workshop as well as country reports on eight transition economies -- Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovak Republic and Slovenia -- and a few other selected papers submitted to the meeting. All of the papers were updated as of April 2001.

This publication can be browsed or purchased directly from the OECD Online Bookshop.


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