Possible effects of a VAT cut of newly built apartments

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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.

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