It has been going on for 8 years now that real estate prices in Hungary were constantly growing. And 2021 set another record in terms of price increase, which is mainly due to the significant rise of prices in provinces and countryside. Based on HNB’s (Hungarian National Bank) recent report, in the 4th quarter of 2021 real estate prices grew 21,4% countrywide in term of 1 year period. A year ago it was 8,9%. In Budapest price growth was a bit lower, 11,3%, in countryside and provinces price increase was 25%.
Based on preliminary datas from local real estate agencies, in the 1st quarter of 2022 there again will be similar amount of price increase, estimated 25,3% countrywide. This is probably because of rising inflation and rising loan interest rates, which motivated locals for immediate purchase of their own property, without waiting any longer. Due to such price increase, estimated real estate overvaluation will be around 18%, says HNB
In 2021 there were 168.000 transaction, which is 15,6% more compared to 2020. Most of transactions was made in the capital. To high number of transaction and lively loan, beside favorable labor market, also made its contribution new support programs that began in the beginning of the last year and Green Home program that began in the end of the last year.
Due to the increasing issuance of subsidized and refinanced loans by the central bank – despite the rise in the interest rate for loans – until February 2022 there is only slight increase can be seen on loan rates.
Predictably, in the 2nd and 3rd quarter of 2022 amount of those who want to use loans and mortgages to purchase property, will be dropped significantly.
In 2021 there were 20.000 units of newly built properties that received occupancy permit, which significantly – 29,5% lower than in previous year. The handed over newly built apartments’ amount in the 1st quarter of 2022 also decreased compared to the same period of previous year. The annual renewal rate of the domestic housing stock is 0,4%, which is quite low if we compare it to average European rates. At the same time, the number of new construction permits issued increased by 32,7% during 2021, presumably mainly due to the reduced VAT for newly built apartments and for buildings that receive construction permits until the end of 2022.
Overall, the supply can’t satisfy the demand in the newly built property market and in the 1st quarter of 2022 the amount of available newly built apartments was 27% less compared to the same period of the previous year.
The newly built property market can’t keep up its adjustment because of several key things, and because of that we are expecting worsening of this market in the current year too. In 2021 among European countries, the most price increase for constructional materials was seen in Hungary. Due to the war in Ukraine, in 2022 prices of raw materials and energy prices grew further, problems with supply chains grew too, which increases cost of new constriction and uncertainties in the market of developments. Predictably, we expecting further price increase for constructional materials, which leads to the postponing of some projects under development. Based on development market’s participants, because of uncertain regulatory environment in a short-term, there may be significant decrease in term of new apartment development, which will be affecting negatively the upcoming two years too.
source: protfolio
