After the political and economic changes of 1989–90, the concept of gentrification inspired many urban researchers in central and eastern Europe (CEE). Despite the growing number of papers, there is still a substantial empirical gap concerning the transformation of inner-city neighbourhoods in the CEE. This paper is based on empirical data regarding the physical and social upgrading of neighbourhoods in inner Budapest. The paper argues that gentrification in its traditional sense affects only smaller areas of the inner city, mostly those where demolition and new housing construction took place as an outcome of regeneration programmes. At the same time, the old housing stock has been less affected by gentrification. This is mainly due to the high share of owner-occupation and the social responsibility of local governments. Thanks to renovation and new housing construction, a healthy social mix will probably persist in the inner city of Budapest in the future.

The concept of gentrification has been extensively used in post-socialist context in association with neighbourhood renewal processes, despite the exact meaning of the term and its social effects not always being sufficiently clarified. This paper builds upon empirical research from downtown Budapest. Our investigation primarily focused on the interplay of three groups of stakeholders involved in urban renewal: politicians, investors and residents. On the basis of our multi-dimensional analysis, we could identify three main types of upgrading: classical gentrification (with two sub-types), as well as incumbent upgrading and soft forms of revitalisation. In the studied neighbourhoods, a mixture of these forms of upgrading could be identified, reflecting a diversified rejuvenation. Gentrification was spatially limited to poverty ridden neighbourhoods subject to local government organised regeneration programmes. The predominance of soft forms of revitalisation is a function of housing market mechanisms as well as the planning control of local districts, which in general together create a healthy social mix despite pervasive regeneration activities.