Paper short abstract:

This paper explores relationships between middle-class formation, leveraged homeownership and public policies and narratives that fuelled privatization, commodification and financialization of housing in Croatia.

Paper long abstract:

This paper explores relationships between middle-class formation, leveraged homeownership and public policies that fuelled privatization, commodification and financialization of housing in Croatia. After privatizing nearly the entire public housing stock in the 1990s, the government has carried multiple mortgage subsidy schemes since the early 2000s. These programmes helped promote leveraged homeownership as a standard form of tenure and contributed to the major household debt and housing boom in the 2000s. The architecture and the public discourse surrounding the schemes dovetailed with and reinforced homeownership as a foundation of the hegemonic model of middle-classness and a form of tenure that is culturalized and naturalized as part of Croatian traditional values and way of life. Some schemes targeted and offered privileges to selected demographic and occupational groups. At the same time, these policies made homeownership dependent on debt in a context of poorly regulated mortgage and real estate markets. After the global financial crisis, the legacy of predatory and irregular practices combined with recession and a housing market bust and resulted in a spike in over-indebtedness, loan defaults and repossessions. Instead of serving as a basis for sustainable and inclusive middle-class formation, these processes made the attainment of dominant middle-class deals increasingly elusive, precarious and inequitable in practice. Some debtors responded by restating their middle-classness to demand public assistance while others came to question their class positions and the value of leveraged homeownership. While the hegemonic model of middle-class formation in Croatia has been politicized, counter-hegemonic projects failed to emerge.