Strong demand, rising prices, moderate supply in the real estate market
Photo by FOTOGRIN / Shutterstock.com
House prices in Hungary continued to rise in the second quarter, with price increases accelerating the most in cities outside the capital, but house prices also rose in Budapest after a year of stagnation, according to the latest real estate market from the National Bank of Hungary (MNB). Report released Wednesday.
The price gap between Budapest and other major cities narrowed in 2021, MNB said.
On a national average, home prices rose 13.3% in the second quarter. House prices in cities outside the capital rose 18.2%, while house prices in Budapest rose 9.1%. Price increases in small communities slowed to 7.3%.
The housing market supply is hampered by the general rise in commodity prices and a shortage of commodities, MNB noted. The temporary reintroduction of the VAT preferential rate on housing construction has boosted the market, but more measures are needed to boost supply in a sustainable way, MNB said.
The National Bank of Hungary launched its FGS Green Home program in October, shifting demand towards new environmentally friendly housing, also encouraging builders to develop “green” homes.
Lenders signed HUF 364 billion worth of home loan deals with consumers in the second quarter, up 81% from the previous year, thanks to subsidies for the purchase of new homes available at from 2021. Credit demand is expected to strengthen further in the second half of 2021.
The number of new homes completed in January-September 2021 was down 1.7% from the previous year. Due to the deliveries of housing initially planned for 2020 but postponed to 2021, this number fell by 27.3% in cities outside the capital.
MNB estimates that more environmentally friendly new homes are around 3.5% more expensive, but the higher price could be recouped in the long run due to more efficient maintenance and greater stability in value. and the interest rate benefit provided by the FGS Green Home program can offset the price.
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