Hungary squanders billions on failed public housing project in Ocsa

January 18, 2014

ocsa

As predicted by numerous experts, government plans to build a public housing project near the town of Ocsa for those who lost their homes to bank foreclosure have failed spectacularly.  Some HUF 2.7 billion (USD 12.5 million) in public funds that might have been used to keep thousands of families in their homes was instead used to build an 80 house slum outside Budapest.

Lack of public transportation, job opportunities, and public facilities (schools, clinics, child care facilities, etc.) have proven to be a major obstacle to finding tenants.  Furthermore, as the settlement was never connected to natural gas as originally planned, the homes must be heated using temporary wood stoves. Despite engaging the Maltese to find tenants and spending HUF 122 million (USD 550,000) on a four part video series promoting the settlement, to date only 42 out of 80 homes have been rented.

Nol.hu reports that the Ministry of the Interior has effectively acknowledged that it is abandoning plans to continue the project by proposing a last minute change to a law on public finances which reclassifies the project as “public reserve housing” for use as temporary shelter in emergencies.

Eager to do something about the growing FX mortgage loan crisis threatening thousands of Hungarian families with foreclosure, in August 2011 the government announced plans to build 500 modest homes on 132 hectares of government owned agricultural land in the village of Alsopakony for families who had lost their homes, the first phase of which was to be completed by the summer of 2012.  The village is situated some 4 km east of Ocsa on the other side of the M5 motorway.  It has no direct rail or bus links to Budapest.   There are only two buses each day to Ocsa and back.

The government announced that the modest 40 to 80 sqm homes (430 to 860 sq ft) would be built to high standards and serviced by paved roads and public utilities at a total projected cost of HUF 15 billion (USD 64 million), or HUF 30 million per home.

When announcing the government’s decision to build 500 homes in the middle of nowhere, Zoltan Kovacs, state secretary for communication, categorically denied that it was the government’s intention to build a “slum”.  And yet that appears to be precisely what it has done, despite the fact that previous attempts in Hungary to build new settlements in agricultural areas had failed.

The houses themselves were only projected to cost around HUF 150,000 (USD 720) per sqm.  However, the cost of building necessary infrastructure (roads, water, sewer, electricity, etc.) inflated this to over HUF 500,000 (USD 2300) per sqm, or roughly what it costs to purchase a luxury home in Budapest’s exclusive Rozsadomb (Rose Hill) district.

By contrast, good quality homes can be purchased in Ocsa (and any other town or village in Hungary) for HUF 100,000 (USD 450) per square meter or less.

Despite being formally declared a project of “national importance” the first phase was not completed until the summer of 2013.

MSZP politician and sociologist Lajos Korozs told ATV’s Olga Kalman on Friday that the project was a “tragedy”.  “Hungary has known for 100 years that you cannot create a settlement in the middle of nowhere.  Only Mozes was successful. Nobody else.”  According to Korozs “the 2011 census revealed that there were many hundreds of thousands of empty flats throughout the country” and that instead of building new homes the government should have set up local agencies responsible for helping those who had lost their homes to bank foreclosure to rent vacant flats or homes as close as possible to the communities where they live.

Korozs says the decision to use the remaining homes as emergency temporary housing will cause the buildings to fall into disrepair and induce the current tenants to move out, resulting in a slum.

Meanwhile, the cost of maintaining and guarding the empty homes costs taxpayers over HUF 5 million (USD 23,000) a month, according to Korozs.

Referenced in this article:

Vége az ócsai kísérletnek, új funkciót kapnak a házak, nol.hu, 17 January 2014

Augusztusban indul a Kormány Szociális Családiház-építési Programja, kormany.hu; 11 August 2011

Korozs Lajos, atv; 17 January 2014