Hungary’s New Rich Carving Out Posh Enclave in Hills Above Budapest

BUDAPEST, Hungary — High in the hills overlooking Budapest, Communist Hungary’s new rich are carving out one of Eastern Europe’s most exclusive residential enclaves.

Although thousands of Hungarians still wait up to 10 years for new apartments and homes, construction of fashionable, modern villas for successful entrepreneurs and professionals is booming in the Buda Hills outside the city.

“I’ve never seen anything like this,” said a longtime owner of a modest stucco home not far from Sandor Endroedy Street, where many of the new homes are being built.

“Everywhere you look, another big one is going up,” said the resident, asking not to be identified.

Unparalleled Boom

Communist officials throughout Eastern Europe have long laid claim to some of the most desirable pre-World War II residences in Budapest and other East Bloc capitals. But there is no parallel to the building boom now being financed by Budapest’s wealthy.

Throughout the area around Endroedy and Tuske streets, workers are busy completing three- and four-story homes and landscaped estates owned by Hungary’s top professionals. They include medical specialists, lawyers, art dealers, popular entertainers and private entrepreneurs who have parlayed high-demand services, such as auto repair and real estate, into substantial profits.

From their terraces and balconies, homeowners have a commanding view of the city’s skyline and the Danube River.

High concrete walls ensure cozy seclusion. Expensive Western-made automobiles are parked in many of the new two-car garages.

Benefits of Reforms

Economic reforms introduced in the late 1960s encouraged limited private ownership and enterprise. Those activities were allowed to expand in the 1970s, and small private companies and cooperative partnerships flourished.

People supplemented incomes with second jobs, by running shops or offering sought-after professional services. The lucky ones have achieved perhaps the highest standard of living in the Eastern Bloc.

Despite a growing foreign debt of $18 billion, 18% inflation and recent government austerity measures, the nation’s successful professionals still seem to have plenty of cash to spend on luxuries once reserved for the party elite.

With few opportunities to reinvest the accumulated wealth, the newly rich have gone on a building spree.

$150,000 Homes

Many of the new homes in the Buda Hills cost more than the equivalent of $150,000, state housing officials estimate.

Most Hungarians must set their sights far lower. Thousands of families still wait in austere housing projects and decaying apartment buildings for new lodgings that better suit their needs.

Ivan T. Berend, president of the Hungarian Academy of Sciences and a leading economic reformer, has called Hungary’s housing shortage “the nation’s No. 1 social problem.”

Erzsebet Rikli, head of Budapest’s Housing Authority, said that 66,000 people are on the agency’s waiting list for new apartments. She said the average waiting period for young singles is eight to 10 years. Married couples with one child wait about five years, while families with three or more children can hope for a new apartment in about a year.

Official Praise

Far from criticizing the upsurge in posh new developments like the Buda Hills housing, Hungarian government officials say they are an important part of a broader program designed to expand private housing ventures.

“These private and cooperative efforts are extremely important in solving our current housing crisis,” Rikli said. “We encourage people to take the initiative.”

In recent years, the Hungarian government has gradually reduced its involvement in new housing construction, relying increasingly on private and cooperative efforts to fill the gap.

Of the 10,000 new apartments built in Budapest each year, only 1,500 are constructed by the state.

Apartment Sales

The state is also putting apartments up for sale in many housing complexes hastily erected in the 1960s and 1970s.

Housing costs remain high despite new government credits to ease the burden.

The average monthly salary is 6,000 forint ($130), while the Budapest Housing Authority estimates that the average new two-bedroom apartment sells for 1.3 million forint ($28,260).

Austerity measures designed to curb inflation and reduce the foreign debt are further reducing the buying power of many Hungarians, leading to growing resentment at the ostentatious life style of those in Buda Hills.

“There is growing social tension,” Rikli said. “The tolerance level is getting lower.”