A Housing Finance Agency for Central-Eastern and South-Eastern Europe

The construction of owner-occupied flats is recovering in most CEE and SEE countries. Yet, the supply of rental flats is still insufficient, with deficits arising especially for the broad costumer group of lower and middle income households. The rental market segment within the housing market fulfils several functions, particularly of a social nature. Markets are considered economically efficient if they provide a supply which is large enough and in accordance with consumer preferences. In CEE countries the supply of financing products for housing construction is evolving rapidly, while SEE countries are still lagging behind. The existent financing products are mainly directed at private house and condominium purchasers. There is a lack of institutional finance for developers, building constructors and cooperatives, which is the main reason for the shortfall in rental housing construction.

The study in hand was financed by the City of Vienna (MA 50), the Austrian Federal Ministry of Economics and Labour, the Association of Austrian Cities and Towns, DIGH (Dutch International Guarantees for Housing), Bank Austria Creditanstalt AG (Unicredit), Kommunalkredit Austria AG, Raiffeisen International and Erste Bank AG. The main aim of the study is the presentation of an efficient method to raise the rental housing supply for lower and middle income groups within the region. Affordable rents in combination with moderate national and international financial support can be achieved by implementing a Housing Finance Agency (HFA) which is set-up as a Public-Private-Partnership and combines the potentials of local commercial banks, international development banks, national and regional housing policy instruments and housing developers.