The obsession with ownership and the lamentable state of our housing policy means we’ve got another thing coming.
Housing has been a serious problem in Slovakia for decades. First, there was the socialist housing. Beleaguered with long waiting times and short supply, these government-built apartments carried all the space and comfort of a Turkish prison cell. Then, during the revolution, there was the never-ending struggle with housing restitutions and senseless reforms. What we’ve ended up with today is a legacy of bad housing policy and a creeping crisis.
Ever since the shift to a market economy, Slovak people have shown an obsession with ownership. Having a population with 92% homeownership might sound good on paper but in reality, it causes a lot of headaches.
First of all, massive demand for housing will inevitably lead to costs skyrocketing well beyond the means of the populace. And in a country without rental options, the poorest will have nowhere to go.
Furthermore, owning a house ties you to one place. The ever-changing nature of a developing market economy leads to a regionally shifting job supply. Large swaths of the population can find themselves in a depressed region with dying industry, while others have a constant lack of new labour. Countries with a fully developed rental market, like Germany or the UK, can cope with that pretty well and move their population around. However, in a country with an extremely high homeownership rate, these events cause a mobility trap and long-term unemployment with no way out.
Although most houses are being owned, not everyone can afford to maintain them or pay off the massive mortgages. That is why Slovakia far outpaces other OECD countries in the growth of household indebtedness, as well as in the increasingly high rate of decaying housing stock. Problems like these require a dynamic policy response, tailored to stop this rolling crisis. However, that is far from what we’ve got.
Housing policy in Slovakia has seen only minute changes since the country gained its independence. It was created at a different time, to address vastly different problems. Moreover, even according to the current policy-makers, it was not set up very well. And yet, it prevails. Each new government lives in the institutional legacy of the past and it shows. The funds are underused and the governance is in disarray. The loans and subsidies are aimed at incentivising homeownership, while what we need is rental housing. And the legal framework is either incredibly restrictive or entirely non-existent.
The past has left a legacy not just in the form of chaotic institutions but also in the minds of the people. We were used to never question the government or its ineffective policies. Ignorance is a benefit when living under state tyranny. However, other European nations show us that it is possible to have an active housing policy that complements the needs of the market. So if we really want to make a difference and introduce positive change into the policy process, it is time for people to start paying attention to these problems and voice their concerns.