Housing Market Report – November 2021
The housing market represents a key area at the level of individual economic agents (households, financial institutions), as well as at the level of the national economy. Developments in the housing market are closely linked to issues of financial stability and fundamentally determine the outlook for economic activity in the short and long term. Overall, it can be said that the housing market is integrally linked to all areas of the national economy. Changes in the housing market, in particular the volatility of house prices, influence the savings and consumption decisions of the household sector through its financial position, and also influence the portfolio, profitability and lending activity of institutions. financial via the stock of mortgage loan guarantees.
The “Housing Market Report” aims to provide a comprehensive view of current trends in the Hungarian housing market and to identify and present the macroeconomic processes that influence the supply and demand of the housing market. With this publication, Magyar Nemzeti Bank regularly presents relevant developments in the Hungarian housing market on a biannual basis.
The real estate market, and within it, the housing market, is of utmost importance to Magyar Nemzeti Bank in fulfilling its main tasks, based on inflation considerations. and economic as well as financial stability factors. The development of supply in the real estate market directly influences economic growth, while excess and insufficient supply can also have serious consequences for financial stability. Rising house prices improve the financial situation of households, prompting them to increase their consumption, which influences both economic growth and inflation. The appreciation in prices is also boosting the lending capacity of financial institutions by reducing their expected losses, which again invigorates the economy with the growth in loans. The correlation between the mortgage market and house prices deserves special attention: during economic cycles, a mutually reinforcing relationship can develop between bank loans and house prices.
The “Housing Market Report” provides a deeper insight into the factors driving market developments and the system of interactions between different market agents by presenting a complex and wide range of information. The housing market is already featured in central bank publications, both in Hungary and internationally, but generally from the perspective of the main subject of the respective publication. Therefore, the “Housing Market Report” represents a unique publication of the central bank internationally as well, due to its integrated presentation of the factors of macroeconomic and financial stability of the real estate market. The information used by the publication includes the following:
- The presentation of the macroeconomic environment influencing the housing market is based on information contained in the MNB Inflation Report.1 The main statistical variables relating to the housing market include changes in the volume of gross value added, and developments in real income and unemployment, as well as changes in the performance environment.
- The analysis of the current development of the housing market is based mainly on information provided by the Hungarian Central Statistical Office, the State Tax and Customs Administration and real estate agents. Information on changes in housing market turnover and housing prices can be divided into differences between new and used housing market developments. In addition to this, data on the regional heterogeneity of the housing market is also used.
- The experiences and proposals of market players and public players, with the contribution of the Housing and Real Estate Market Advisory Council (hereafter: LITT), shed light on the broader issues of market development. housing.
- The analysis of the residential mortgage market is mainly based on data from the balance sheets of credit institutions and interest statistics collected by the MNB; information on the qualitative characteristics of loan development collected in the loan survey2 is also used.
2 Magyar Nemzeti Bank, Loan Survey: https://www.mnb.hu/en/financial-stability/publications/lending-survey