The most comprehensive concept about the region’s housing system entitled the “theory of the East European Housing Model” (TEEHM) was developed by Hegedüs and Tosics (1992a, 1996). The authors follow János Kornai’s (1980) theory of the planned economy describing the allegedly detrimental effect of bureaucratic central planning on the efficiency of economic production, and the equilibrium of supply and demand. Hegedüs and Tosics (1992a, 1996) portray the state-socialist housing system as characterised by mainly the subordination of the housing market to the state, and the simultaneous restriction of private property rights and the extension of tenants’ rights. Although it would follow from the theory that the state had unlimited power in steering the economy, Hegedüs and Tosics (1996, pp. 16–20) argue that the “interests and endeavours” of state enterprises and individuals were so strong that they could have been only suppressed by costly bureaucratic mechanisms that the states could not afford to set up and, instead, tolerated these individual activities.

The authors suggest that housing prices (rents of public rental housing), kept artificially low to reflect the public service function of housing, generated a permanent excess demand for housing, prompting a serious supply shortage. In addition, the population accumulated “forced savings” in the shortage economy due to the lack of options to spend or invest their income (Hegedüs and Tosics, 1996).

According to the authors, housing shortage and the lack of options to invest forced savings of the population prompted many to either improve their housing situation within the framework of the state-based system (voice) or achieve their housing goals outside the system (exit). The former mostly concerned the influence over the allocation of public housing units. The middle class successfully advocating for their interests managed to obtain a preferential position among applicants for public housing and became overrepresented among public tenants in the 1960s as described by Konrád and Szelényi (1969). Exit strategies consisted of private quasi-market practices such as e.g. private housing construction through self-build that was allegedly strongly disfavoured in state-socialist housing systems. Since voice and exit practices eroded state-socialist principles of the sector, they created “cracks” in the system.

According to the authors, the disintegration of the EEHM started through the widening of these cracks. Self-build, considered by authors a quasi-market practice based on household labour, played an important part in the disintegration of state socialism. It served as an exit from EEHM either as an alternative strategy of housing access for those in housing need unsatisfied by state provision, or one of the few channels of spending forced savings accumulated in shortage economies.

Despite the common ideological basis of national housing systems in CEE, countries significantly diverged in their approach to housing from the 1960s onwards. Authors dealing with housing developments in the state-socialist era differentiate between Soviet-type, classic and reformist state socialism (Hegedüs and Tosics, 1992a, 1996; Soaita and Dewilde, 2019). In the Soviet and classic versions of state socialism implemented in the 1950s in all CEE countries, dwellings in multi-family residential buildings and construction companies were nationalised, ownership of housing, construction entrepreneurship and self-build became restricted (Hegedüs and Tosics, 1992a, 1996; Soaita and Dewilde, 2019). From the 1960s onwards, some countries such as Czechoslovakia, Hungary, Poland and Yugoslavia implemented reforms in their housing systems that increased the role of private housing provision in the form of self-build, or cooperative or corporate housing construction (Hegedüs and Tosics, 1996; Tsenkova, 2009; Soaita and Dewilde, 2019). In Czechoslovakia and Poland, cooperative housing represented the new form of housing provision introduced during reformism, only in Hungary and Yugoslavia did self-build become a powerful private alternative of public housing provision (in Yugoslavia also corporate provision) from the 1970s onwards (Hegedüs and Tosics, 1996; Soaita, 2013). Still, self-build was supported even in South Eastern European (SEE) countries promoting other forms of private provision (Tsenkova, 2009, pp. 31–32).

Since self-build required the extensive involvement of family labour (Kansky, 1976, p. 111; Hegedüs and Tosics, 1996, p. 22), its increase can be interpreted as the rise of familialism towards the end of state socialism. Hegedüs and Tosics (1996) argue that the rise of this form of private construction was the symptom of the disintegration of state socialism. In this sense, it was part of the transition that already began in reformist countries before 1989.