Catalytic capital investment as an enabler of affordable rental and cooperative housing - Investor Report

Resource context

This investor report, “Catalytic capital investment as an enabler of affordable rental and cooperative housing in Central and South-Eastern Europe (CSEE)”, is published by the Periféria Policy and Research Center and authored by Zsuzsanna Pósfai and Csaba Jelinek, with Ivon Pavlović as contributing author. It examines how “catalytic capital” (patient, risk-tolerant, flexible capital) could help establish affordable rental and cooperative housing models in CSEE, where housing affordability challenges are structurally different from higher-income European markets.

Housing conditions and affordability pressures

Across CSEE, the report highlights low energy efficiency and poor quality housing stock, widespread energy poverty, and a high rate of housing deprivation. It estimates that at least 20–30% of the population— including middle-class households—struggles with housing affordability. Public housing is typically marginal, while private rental markets are underregulated, provide limited stability for tenants, and are often too expensive for most households. The report notes that since 2015, several countries in the region experienced some of the highest increases in housing price indices compared to EU averages (2012–2021 index shown with several countries well above the EU-27 average).

Evidence base and research approach

The study combines desk research on housing systems and finance instruments across eight countries (Bosnia and Herzegovina, Bulgaria, Croatia, Czechia, Hungary, North Macedonia, Serbia, and Slovenia) with interviews with local housing experts. It then focuses on four “core countries” (Croatia, Hungary, Serbia, Slovenia) for representative surveys and deeper review of finance products. Surveys were run in Belgrade (n=1341), Budapest (n=1762), Ljubljana (n=1004), and Zagreb (n=1052), primarily via phone with up to 15% web interviews, using a two-step questionnaire to estimate demand for long-term, secure, affordable rental options.

Demand for secure, affordable rental and cooperative housing

The report finds that more than half of residents in the four surveyed capitals would welcome a change in their housing situation. It defines a “Wide Demand Group” (WDG) of people open to long-term affordable rental and above the lowest three income deciles; 51–75% of respondents fall into this group. A “Narrow Demand Group” (NDG)—13–26% of the total population—meets additional criteria indicating a more defined potential user base for new non-profit rental/cooperative models. NDG members are typically younger (average age 43 vs 52 overall), have more children, and have housing expenses around 20% higher than the WDG, suggesting relative financial stability but persistent inability to resolve housing needs through existing markets.

Gaps in current housing finance

For individuals, the report observes that most institutions offer standard mortgage loans, which many households cannot access due to creditworthiness requirements. It points to constraints such as income levels, employment status, minimum own-capital requirements (often around 20%), and debt-service-to-income (DSTI) limits. For organisations and companies, project finance is typically short-term (often 2–3 years) and oriented toward build-for-sale models, which does not match the long payback periods of rental and cooperative housing. The report frames two central obstacles to building a non-profit housing sector: short loan maturities for organisations and the lack of financial tools that allow housing providers to scale.

Proposed pathway: catalytic capital and intermediaries

The report’s theory of change proposes using catalytic capital to bridge missing long-term finance—often as complementary funding alongside mid-term bank loans—to “kickstart” a market shift until conventional lenders can adopt longer-term frameworks. Because catalytic capital providers have limited capacity to work directly with emerging housing providers, intermediary organisations are described as essential to structure capital, issue loans/guarantees/equity, and provide capacity development. As a concrete case, MOBA Housing SCE (a European Cooperative Society founded in 2020) is presented as a potential regional intermediary via its MOBA Housing Finance Accelerator, aiming to raise €1 million by end-2023 and to provide bridge (or subordinated) loans to cooperative initiatives, complementing limited member savings and constrained bank lending.