Housing Crisis Threatens to Fracture Central and Eastern Europe

The housing crisis in Central and Eastern Europe (CEE) is significantly impacting political stability, as highlighted by a report from Social Europe. Authors Jeffrey Sommers, Daniel Pop, and Cosmin Marian examine the complexities surrounding housing availability and affordability in urban centers, linking these issues to a rising trend in right-wing politics and anti-establishment movements.

The transition from communism brought not just freedom and economic growth across CEE but also a critical imbalance in housing availability. While home ownership rates in CEE are among the highest globally—often exceeding 80%—the reality is starkly different in urban areas that offer job opportunities. For instance, Romania boasts a home ownership rate of 96%, yet many residents struggle with the soaring costs of housing in cities like Cluj-Napoca, where prices per square meter are higher than in several major Western cities.

Despite CEE's overall high ownership rates, the concentration of affordable housing in rural areas contrasts sharply with the scarcity in urban hubs. This discrepancy leaves the working and middle classes frustrated as they seek better employment opportunities. The authors argue that the lack of effective housing policies by governments exacerbates these issues, leading to increased frustration and potential political unrest.

The article discusses the rise of populist figures, such as Calin Georgescu in Romania, who capitalized on public anxiety regarding living costs. Cities like Cluj-Napoca, once quiet regional capitals, are now economic centers but have become unaffordable for many. The authors emphasize that high urban housing prices hinder citizens' ability to secure decent jobs, forcing many to consider relocation.

The report calls for a reevaluation of housing policies, particularly the need for public development banks to provide affordable loans for housing construction. The authors suggest that these banks can offer fixed-term loans at lower interest rates, which would help alleviate the housing supply crisis in growing urban areas.

Two main solutions are proposed: the expansion of public development banks and the initiation of public or public-private construction programs for social housing. Such programs should focus on building housing that is accessible to the working and middle classes and should include green mobility options and community services to enhance quality of life.

The authors argue that returning to the mid-20th century's level of public sector scale and competency is essential for restoring social stability and fostering economic growth. They caution that failure to address these housing challenges may lead to continued support for right-wing populism, which threatens the socio-political fabric of CEE. In conclusion, the report from Social Europe outlines the urgent need for sustainable housing policies in Central and Eastern Europe to address the ongoing housing crisis and its implications for political stability. The authors advocate for comprehensive strategies that prioritize the needs of the working and middle classes to foster a more stable and equitable society.