After a decade of transition from planning to markets, the countries in Central and Eastern Europe (CEE) are still struggling to ‘enable the housing markets to work’ in a more efficient and equitable manner (Angel, 2000; Pishler-Milanovitch, 2001). After the initial years of speculation and escalating house prices, housing markets even in the best economic performers have remained sluggish and new housing output has collapsed. Besides the low level of housing market activity, there has been an even lower level of mortgage lending (Hegedus et al., 1996). Although government subsidies have been reduced, levels of transfers are often higher than those provided in most industrialized economies with well-established market-based housing systems (Buckley and Tsenkova, 2001). It appears that due to ‘populist policies’ most government resources are being used to provide poorly targeted subsidies rather than contribute to the development of a viable infrastructure of private finance (Struyk, 2001). In addition, an extensive privatization of public assets – including public housing – has taken place (Clapham et al., 1996). While privatization of the industry essentially has lead to the emergence of a more competitive system of housing services, the privatization of housing has created ‘nations of home owners’ with levels of home ownership over 80 per cent (Tsenkova, 2000a).