You could have made a 40 per cent profit last year

Hvg.hu: There is a good chance you could never guess where you should have invested you money in 2015. It is always easy to be clever in hindsight and this is no exception. While demand bank deposits earn next to zero per cent and even sums tied up bring 2-3 per cent maximum, the price of apartments in concrete housing blocks in Buda increased by 41 per cent on average last year — and this happens to be the type of property that sells like hot cakes if you need your money fast. Selling times average at 35 days and buyers have the least margin for bargaining. In contrast, the average selling time of residential houses is six months and sellers will need to be prepared to reduce the price to catch a buyer.

Hungarian residential property prices almost on pre-crisis level

hvg.hu: Residential property prices are still on the increase. In Q3 2014 buyers were facing the same prices as at the turn of 2008/2009. According to figures published by FHB Jelzálogbank there has been a continuous hike in residential property prices since Q2 2014, although the rate of increase has been diminishing gradually. Between April 2014 and September 2015 residential property prices increased by about 25.8 per cent both nominally and in real terms. The number of planning permissions granted (8616, an increase of 1000 over the same period of the previous year) also increased between January and September 2015.  The volume of loans also reflects the boom of the residential property market. In Q3 2015 the value of residential loans granted exceeded HUF 100 billion, an increase of 43.5 per cent over Q2.

Unlucky apartment buyers seek help from the Prime Minister

napi.hu: Apartment buyers who signed their contract last year at a gross purchase price (as opposed to a “net + VAT” price) will not be able to enjoy the benefits of the VAT reduction – not even if they can take delivery of the “product” in a year or two. There is no legislation for this situation and even though this is against the intention of the legislator, there is nothing to force developers to pass on to their buyers the extra profit they happen to make. The only option the latter have is to cancel the contract but this would, too, benefit the developers who in view of the significant price increase that has occurred in the meantime can resell the apartment at an even higher price. As there is no comforting solution at present, affected apartment buyers wrote a letter to the Prime Minister, asking him for help.

Don’t hope for cheaper residential properties as yet

napi.hu: The government expects a doubling of new residential property developments as a result of the VAT cut, but prices will reflect the changes in the long run only. Earlier discounts and subsidies have been cancelled which made new homes more expensive, but the new subvention scheme will hopefully boost the market.

The twin pillars of the new subvention scheme are the reduction of VAT levied on new residential apartments to 5 per cent from 27 per cent (for apartments and houses up to 150 and 300 square metres, respectively), and a refund of up to HUF 5 million for private person developers of VAT levied on not more than 70 per cent of construction expenses backed with an invoice. Both schemes apply until 31 December 2019. A new apartment/house is one that has no occupancy permit yet or whose residency permit is not older than 2 years.

Do you own a house? Here’s some good news

napi.hu: A call for tenders for state subvention of the comprehensive overhaul of residential properties will be published soon. Property owners will be invited to submit their tenders from August. The objective of the government is to provide a state-funded scheme for the modernisation of residential properties owned by private individuals. The source of the funds will be GINOP, the Economic Development and Innovation Operational Programme. The government approved the amount dedicated to the extension of the programme back in mid-December. Part of the funds amounting to HUF 103.9 billion and available from August this year will be used as loans aimed at improving the energy efficiency of residential properties and the increase of the use of renewable sources of energy.