Press Releases 1998

[Index]

URBAN REFORM: CONSTRAINTS AND OPPORTUNITIES

9 September 1998

The political and economic changes in the central and east European countries in transition to a market economy have had far-reaching implications for the urban economy, the urban structure and the urban functions. Within the new market reality, urban development has led to a wave of investments both in building and in land uses, offering opportunities for a higher return in selective inner-city development by the private sector on the one hand, and to a lack of efficient investments to support lower-income households, on the other. This has accentuated the urban problems, bringing about conflicts over affordability, housing shortages and deprivation.

The study on Human Settlements Trends in Central and Eastern Europe (ECE/HBP/105) by the United Nations Economic Commission for Europe (UN/ECE) analyses the impact of these factors against the background of the rapidly changing roles of traditional institutions and actors.

A survey of investment reveals that there is a steep decline in overall residential construction. Currently fewer than two residential units are being completed annually per 1,000 inhabitants. Improving the infrastructure is considered the cornerstone of the new economy, and much repair and renovation is taking place, particularly in the inner cities. Yet, there is an increasing need for investment in housing renewal, especially to modernize existing panel housing estates.

These processes, parallelled with public sector financial difficulties, and in some cases with economic recession and political instability, require an urgent commitment to a new, economically and politically feasible strategy to make the market more efficient while taking the most urgent social housing needs into account. This is one of the key findings of the UN/ECE study.

Housing policy choices are often strongly political. It is clear that housing reforms have taken a back seat in the overall reform process. Social housing is not on the political agenda. Given the climate of fiscal restraint and concerns about budget deficits, there is a growing preference for relying on market solutions through the private sector. Future housing policy makers should develop strategies that are both workable and financially realistic. To achieve any progress in solving the housing problem, all parties should be involved in the housing provision system.

Housing should be seen as an essential part of the productive sector of the economy, which can be used as a tool to drive economic growth. According to the UN/ECE study, this justifies an active involvement of the government, encouraging investment in the sector, enabling markets to work more efficiently and assisting marginalized groups in society to have access to affordable housing.

The study stresses the need to develop local housing agendas to address local priorities, to mobilize resources, and to assign responsibilities to the different actors at the local level. However, much work remains to be done to build effective local decision-making processes and clarify the role of the municipalities.

The study on Human Settlements Trends in Central and Eastern Europe provides an overview of the most important trends in human settlements development between 1992 and 1997. It is expected that this publication will be updated every five years.

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