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Budapest residential property market may slow down

Napi.hu, 30 July 2018 – In the first half of 2018 there were 6517 apartments built in Hungary, 30 per cent more than in the same period of the previous year. The number of residential units under planning was 18,066, 8.9 per cent less than in the first half of 2017. The number of planning approvals issued in Budapest decreased by 27 per cent. 50-50 per cent of residential properties are still built by private persons and companies, respectively.

54 per cent of apartments created in a new building are located in houses, 36 per cent in condominiums and 6.2 per cent in gated residential communities.

The average floor space of apartments is 101 square metres, an increase of 5 square metres from the previous year. The number of apartments planned reduced by 27 and 3.5 per cent in Budapest and in county centres, respectively, and increased (by 17 per cent) in other towns and cities only.

Warning signs on the apartment market

napi.hu, 23 July 2018 – Demand is still soaring on the market of new apartments but price hikes stole some of the impetus. According to the CEO of a major property agency there are still approximately 7-10 thousand apartments sold in Budapest annually but the average time needed to sell a property has increased as a result of the higher prices.

According to market experience HUF 30 million is a dividing line: more expensive properties take longer to sell.

The low VAT resulted in neither overdevelopment nor oversupply and apartments in the process of building sell within a year maximum.

Some analysts expect a small supply increase after 2020 and also a stronger demand for pre-owned apartments.

Government super weapon apparently missed its target

napi.hu 4 July 2018 – The end of the preferential 5 per cent VAT rate will put an abrupt end to the housing boom and result in a brutal price increase of newly-built apartments. The almost 25 per cent price hike will have a serious effect on instalments paid for new apartments, new construction projects and on new developments after 2020, said to portfolio.hu based on a radio interview with Mihály Varga finance minister.

Varga reminded that the term of the Preferential VAT Act runs between 2016 and 2019 and that the government decided to forego significant tax income to further its demographic goals. However, 10 per cent of new apartments are bought by foreigners in Budapest, which means the benefit is exploited by real estate investors which is not what the government was aiming to achieve.

How long can the rally last?

napi.hu 15 January 2017 – Hungarian construction industry output is growing fast. According to market analysts, however, the number of restrictive factors is growing, too. A poor 2016 performance meant a very low base which supported a spectacular relative increase in 2017. Development projects financed by the EU and residential construction drive the industry forward. Growth is set to continue in the next few months: the volume of orders in November was 110 per cent higher than a year before. That said, a lack of workforce and the resulting increase of expenses pose significant problems for construction companies. Also, the future of the discounted VAT rate levied on residential projects is still not clear and if the reduced rate is cancelled the willingness to start new projects may decrease.

Residential property market report

napi.hu, 12.05.2017 – According to a recent residential property market report published by MNB, the National Bank of Hungary, prices in Hungary grew by 15.4 per cent on average last year. This increase can continue at a more subdued rate in 2017. Budapest witnessed the highest increase with 22.5 per cent, which is, however, still lower than the 25-30 per cent seen in previous years. Domestic residential property market is still shaped by rising prices and a growing turnover, and the supply side responded to increased demand with a significant boost of construction activity. The report, which was published for the third time this year, says the increase in demand was supported by favourable household income and labour market trends and low interest rates. MNB experts say neither the increasing volume of residential loans nor the growing average apartment prices are a sign of overheating.

Residential Property Market Slowdown

napi.hu, 04.05.2017 – According to the estimate of a major property agency a total of 10.6 thousand apartments changed owners in April, 16 per cent less than a year ago. Poor weather and the Easter holidays were bad on the property market which, following the boom in March, closed with significantly more modest numbers in April. That said, 10,575 transactions are still one of the highest figure since last summer though, despite being 16 per cent less than a year ago, the survey says. According to the agency’s estimate 40,175 properties were sold in the first four months of the year, 13 per cent less than the 46,000 transactions recorded in the same period of the previous year.

Decreasing apartment prices on the horizon?

napi.hu, 29.11.2016 – There are signs of slowing of the property market, not only in downtown Budapest but in the outlying districts such as South-Pest, too. Prices are stagnating but experts believe they may even start to decrease in the near future. Real estate agents agree that the selling price hike has stopped and is hovering at previous, high levels, but any further growth of supply may result in lower prices. One source of such growth could be the consequence of the exchange rate limit that may increase the monthly instalments of loans denominated in a foreign currency and this, in turn, can force owners to offer their properties for sale. This could bring about a price drop of 5-10 per cent. However, the bargaining margin has not increased yet. Owners of condominium apartments seem very tough negotiators and are not prepared to give discounts exceeding 5 per cent. For detached or semi-detached houses buyers can achieve a little more: 5-12 per cent.