Housing as a Fertility Trap: The Inability of States, Markets, or Families to Provide Adequate Housing in East Central Europe

Abstract

This article belongs to the special cluster, “Politics and Current Demographic Challenges in Central and Eastern Europe,” guest-edited by Tsveta Petrova and Tomasz Inglot. We explore housing finance and policy in East Central Europe to understand the connection between housing, in particular independent household formation, and the demographic crisis. The combination of high debt-free homeownership rates with illiquid housing finance and limited rental markets produces conditions where housing restricts independent household formation and likely has a restrictive effect on fertility. We first assess the housing regime type in East Central Europe and demonstrate that it closely corresponds to the “difficult housing regime” in Southern Europe, which has well-established negative effects on independent household formation and fertility. Then we present a detailed case study of Hungary, which is a country with very low fertility rates and substantial changes in housing finance and policy over time. In particular, the issue was recently politicized through housing policies centered on household formation to counter the demographic crisis. We present a detailed analysis of policies related to access to housing for young adults through increased access to markets or state housing support schemes. These policies attempted to reduce dependence on families, but after the crisis, we find that these policies reinforce, rather than challenge, dependence on families for housing solutions, thereby limiting independent household formation. While these policies may serve a rhetorical role demonstrating a state response to the demographic crisis, we claim that their impact on fertility can be at most minimal because of stringent restrictions in access that concentrates on upper-middle-income households and limited financial commitment.