In virtually every reforming socialist economy in Europe, housing markets collapsed as the economies went into recessions and production shifted away from public sector production. Because housing services are responsive to changes in income, and particularly interest rates, a reduction in demand was to be expected given the turmoil of the transition. In addition, because housing services are overwhelmingly provided by the private sector in market countries, and had been largely provided by the public sector in transition economies, one might, as a result, expect an even larger shift. However, in many of the transition countries a decade after the collapse of these markets, production and transactions remain at very low levels even in countries where economic growth has been restored for a number of years. 1