The price of unpredictability: industry leaders on the realistic possibilities for affordable housing

Instead of the tediously repeated statistics on the housing crisis, the opening event of the 11th season of KÉK focused on the options available to market players. In the panel discussion, Sándor Scheer, founder and CEO of Market Építő Zrt., and András Wolf, the company's deputy chief technical officer, debated their views with Gergely Fernezely, lead designer at FBIS, and Csaba Jelinek, sociologist and co-founder of the Periféria Centre. The discussion was moderated by Samu Szemerey.

Hidden cost drivers: uncertainty and disorganisation

Although public opinion often sees rising construction material and labour costs as the reason behind high housing prices, the discussion highlighted that there are much more complex, mutually reinforcing processes at work in the background. Participants agreed that the biggest cost driver is actually unpredictability: uncertainty in the regulatory environment, protracted permitting processes and the risk of frequent design changes during projects are all factored into the final price.

According to experts, in Hungary it is often not the technological costs of construction that are high, but rather there is still significant room for improvement in the organisation of processes. Efficiency is hampered by the fact that, in the design culture, concepts are often set in stone too early, without considering the total life-cycle costs.

Sándor Scheer, founder and CEO of Market Építő Zrt., highlighted the critical role of land prices, emphasising the importance of state involvement:

„The real help would be if professionally prepared, serviced plots were available for housing construction, which investors could purchase at realistic prices. This would enable the state and local authorities to regulate most effectively where and what kind of housing should be built, thereby significantly reducing the price of the end product.”

The lack of rental housing and quality guarantees

During the discussion, the distortion of the domestic home ownership structure emerged as a prominent topic. In Hungary, the proportion of privately owned properties is exceptionally high by European standards, at over 90 per cent, while a significant part of the rental market operates as an unregulated „shadow market”. Sociologist Csaba Jelinek pointed out that affordability should be assessed not only in terms of purchase price, but also in terms of housing costs relative to household income.

According to experts, the lack of a stable institutional rental housing sector (build-to-rent) is not only a social issue, but also a quality issue. Lead designer Gergely Fernezelyi believes that the uncertainty of the current legal environment is holding back both landlords and tenants.

„If rental flats were built within an institutional framework, this would also lead to an improvement in the quality of construction. If a developer has to operate the building in the long term, it is in their best interest to create a durable, energy-efficient and low-maintenance building, rather than just being responsible for it until it is handed over.”

Technological change: not the return of the „panel”

How can we build more cheaply and quickly without compromising on quality? According to the participants in the discussion, modern industrialised technologies – such as prefabrication, modularity and BIM-based design – offer a real alternative. However, it is important to clarify the concepts: the experts emphasised that this is not a return to the old era of prefabricated buildings, but a precision, quality-assured engineering solution that is already extremely widespread in developed countries.

The main obstacle to the spread of this technology is currently the size of the market. In order for the cost-reducing effect to take hold, economies of scale and sufficient volume are required. András Wolf, Deputy Chief Technical Officer at Market, pointed out that the main enemy of efficiency is the subsequent modification of plans.

„The most critical point is making changes after the design has been finalised. When requirements change during construction compared to the approved plan, whether in terms of floor plans or technical content, costs can increase exponentially. Efficiency is based on disciplined preparation, acceptance of standard solutions and adherence to plans.”

Regulatory environment: differentiation is needed

Among the structural problems, participants highlighted that current regulations are often overly detailed and do not distinguish between market-based luxury developments and affordable housing projects. Cost-effective construction is often hampered by overly strict local building regulations, unreasonably high mandatory parking space requirements in some areas, or purely aesthetic requirements, which significantly increase costs without substantially improving quality of life.

During the professional dialogue, the possibility of differentiated regulation in connection with the Otthon Start Programme was raised. According to the proposals, in the case of projects aimed at providing affordable housing of a sufficient volume (e.g. over 250 dwellings), it would be justified to introduce a fast-track, simplified licensing procedure and to review parking standards and other regulations in the interests of efficiency.

The principle of „less is more”

At the end of the discussion, the participants reached a consensus that rationalising buyer and customer demands is also necessary to achieve affordable housing. Expectations such as overly unique floor plans, large spans, or the imposition of technical features typical of family homes in a condominium environment make projects disproportionately expensive.

The efficiency model developed by Market follows the principle of „less is more”: this means accepting typical structures and standard solutions, and prioritising smaller floor areas that can be furnished excellently and functionally.

In his closing remarks, Csaba Jelinek emphasised social responsibility:

„Affordable housing cannot operate on a purely market basis, with economies of scale, without adequate government involvement and regulatory incentives. Structural changes are needed to ensure a healthy balance between housing costs and incomes in the long term.”

However, experts emphasised that although compromises are necessary, cheaper housing should not mean short-lived or poor-quality buildings. Structural safety, durability and sustainable operability are basic requirements that should not be compromised for the sake of cost reduction.