Possible effects of a VAT cut of newly built apartments

napi.hu: If the government approves the proposed VAT cut we can expect the following effects: at a VAT rate of 18 per cent there can be a slight increase in the number of new apartments on offer, but the prices remain stable. At a VAT rate of 5 per cent prices may fall by 8-10 per cent at most.

Apart from the VAT cut, a credit scheme with a 3-4 per cent interest rate would be needed to stimulate demand. The rollout of this scheme is, however, delayed because the European Commission objected to two clauses of the draft agreement to be concluded between the government and the banks on more active residential construction financing. That said, the construction industry would be happy to see even the slightest market boost to improve its seriously shrunken order book. In lack thereof the industry’s output will return to 2012 levels.

Return of the “Kádár-cubes”?

napi.hu: In order to support residential building projects and to “improve the quality of our constructed environment” the government plans to re-introduce the standardised residential house plans reminiscent of the “Kádár-cubes” of the socialist era. A “national standard plan catalogue” comprising plans with characteristic architectural features of the respective region will be compiled for prospective home owners. Standardised plans will be cheap and buyers will be freed from the hassle of plan approval proceedings: a simple “acknowledgement procedure” will suffice. The Hungarian Chamber of Architects is happy; its members are not. Architectural plans will be accompanied by a technical documentation including an itemised list of materials and man-hour requirements. The new scheme will apply to residential buildings with a floor-space not exceeding 160 sq. m. and three stories (basement, ground floor, attic).