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GOVENMENT TO BUILD, MUST SOLVE FINANCE PROBLEMS

Housing demand grows

The Slovak government plans to maintain the current ratio of 307 flats per 1,000 residents and build 97,000 apartments by the year 2000, according to its official program statement. In the years prior to 1989, the communist regime built a huge construction industry, which employed 300,000 people and produced suburbs like Bratislava's Petržalka. While these housing developments are now seen as eyesores on the landscape, they satisfied a major demand for dwellings. If the government's target is to be met, about 16,000 new apartments will have to be built a year. But in 1995, only about 6,000 flats will have been commisioned. In the meantime, prices soared as high as 800,000 Sk for a three-room flat in Bratislava.

The Slovak government plans to maintain the current ratio of 307 flats per 1,000 residents and build 97,000 apartments by the year 2000, according to its official program statement.

In the years prior to 1989, the communist regime built a huge construction industry, which employed 300,000 people and produced suburbs like Bratislava's Petržalka. While these housing developments are now seen as eyesores on the landscape, they satisfied a major demand for dwellings.

If the government's target is to be met, about 16,000 new apartments will have to be built a year. But in 1995, only about 6,000 flats will have been commisioned. In the meantime, prices soared as high as 800,000 Sk for a three-room flat in Bratislava. So the question is: Where will the money come from? The government has already stretched this and next years' budgets with its ambitious plan for a highway system, which will swallow as much as 120 billion Sk by the year 2005.

Increasing the housing stock could be accomplished by three different methods. First, 10,000 to 12,000 flats can be gained by completing construction already started. Second, the existing housing stock could be expanded by adding new floors and penthouses. Third, the decisive challenge is entirely new construction.

The Government voted down a housing policy proposal the Ministry of Construction submitted in August, mainly because it demanded too much state financial involvement. So housing policy-makers must find other means for channeling the necessary finances into construction.

The focus around which all the other issues revolve is the structure of home ownership. Of the 1.6 million flats across the country now, 50.2 perent are privately owned, 21.6 percent are communal, and 22.1 percent are cooperative. Privatization continues, but citizens cannot be sure of what the advantages and disadvantages of owning their flats will be. So far, the government has allocated subsidies evenly into all three types.

But it is likely that the state will gradually decrease the money it provides for housing. In the meantime, it will try to find a model that would use housing finances more effectively. The government will look for ideas in western European countries with a tradition of strong state involvement in housing, where the issues are similar to those in Slovakia.

Model Solutions

One source would be Austria, which has 200 non-profit housing associations. Half of them are cooperatives, and half are PLCs. One-third of all construction is done by non-profit enterprises, which the state subsidizes, ensuring that all money stays in the housing sector. Housing policy is the responsibility of individual municipalities, which can decide, for example, whether it wants to subsidize young families.There is also a purely private sector in Austria, to which no government price regulations apply. A lot of emphasis is put on complex planning, with regard to the environment and future developments.

The Swedish model is even more egalitarian - the affluent live next door to families on welfare, and rents in the private housing sector must not exceed by more than 5 percent those in the non-profit sector. It is a complicated scheme involving tenants' associations and a system of cooperatives. The latter are usually small, with less than 100 members. Tenants' associations are organized at three levels - local, regional and national - matching state administration for efficient communication with government authorities. Construction is governed by local authorities, not the central government.

Both the Austrian and Swedish models stress de-centralization and strict financial control. The former feature would appeal to municipalities, whose influence and autonomy has grown over the years. But whatever way Slovak housing goes, one key questions will be the fate of the mammoth cooperatives, where many people do not want to buy out. Will cooperatives transform into tenants' associations and cooperative groups?

Very few states could claim no housing problems and the standard of Slovakia's housing is relatively high among eastern European countries. Yet any government hoping to keep power must solve the existing problems, because a good housing situation is a basic prerequsite for political stability.

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