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The privatisation of social housing transformed many transitional countries in Central and Eastern Europe into societies with predominant homeownership and a marginalised rental sector. The case of Slovenia shows that, despite a low level of government support of homeowners, the homeownership rate has remained at its unsustainably high level and households continue to express strong preferences for homeownership. The paper explores factors explaining current homeownership preferences in Slovenia. A comprehensive model of housing preferences is built. The model follows the proposition that tenure preferences are strongly influenced by general cultural norms and factors characterising the social, economic and political environments. The model is tested using structural equation modelling based on a survey of Slovenian households. The results reveal that the strong preferences for homeownership in Slovenia can be explained by the firm perceptions of the financial advantages of homeownership and by the lack of available rental alternatives.
Notes
1 Prior to 1991 public rental housing was also called socially-owned housing. In 1991 this stock amounted to 33 per cent of the total housing stock. Since privatisation non-profit rental housing encompasses non-privatised socially-owned housing and a small number of newly constructed non-profit dwellings.
2 The final sample size was reduced from 300 to 272 due to missing variables, particularly with regard to household income. The response rate in the telephone interviews was 42 per cent, therefore in order to obtain a sample of 300, 714 households were contacted.
3 There is a serious asymmetry in the distribution of the variable FREEDOM (S = − 2.16, K = 4.76). However, this variable was already excluded by the exploratory factor analysis in the first step of the analysis and does not enter any further models.
4 Current subsidies for homeowners are mainly in the form of housing loan interest rate relief (2 per cent of taxable income), housing acquisition and maintenance cost relief (2 per cent of taxable income). Owner-occupiers are exempt from capital gains tax on the sale of their dwellings for three years. There is no tax on imputed rent and property taxation is very low for all real estate owners. Housing allowances are limited to tenants in non-profit housing. Although there is growing concern about mortgage default, there is virtually no state support for homeowners who experience such problems. There is no credit activity by the government. The National Housing Savings Scheme, modelled on the German Bausparen, was introduced in 1999 and subsidises savings with a premium. Due to the limited amount of money available only a certain number of contracts is available. The government has already expressed its intention to abolish the scheme in the near future.