House prices have risen strongly in past years, helped by rising incomes and declining interest rates.
At the same time, construction of new dwellings has remained fairly muted and has only recently shown
signs of picking up. A characteristic feature of the Slovak housing market, and a consequence of the
privatization programme initiated in the early 1990s, is the virtual absence of a private rental market. As
euro membership will most likely go along with easier financial conditions and also entails limited
availability of national policy tools, current housing policies will have to be adjusted. The challenges are to
avoid overheating of the housing market in the medium term, in part by making supply more reactive to
demand, and to phase out the hurdles that are currently impeding the private rental market, which would
facilitate labour mobility.
This Working Paper relates to the 2009 OECD Economic Survey of the Slovak Republic.
