Budapest, Hungary’s capital. In Hungary, the housing market is prospering. There is rising demand for homes yet a short supply of homes. Employment is growing along with wages.
Hungary’s central banks need to track down the market scrupulously. There are price increases on new homes and a substantial demand.
Factors that increased the demand
- Low-interest rates peaked up the demand since the 2008 debt crisis
- Increased Employment
- Increased Real Wages
- Bare supply of new homes
The recovery of the housing demand came to be when the government started increasing the amount of 5-year loan subsidies in 2013 which resulted in significant credit demand. The market continued to rise 2014.
The Hungarian economy as done well the past years. According to reports, the city of Budapest remains modest investments by foreign investors.
Areas also are going through the transformation like the seventh district making it a clique cultural place with galleries, cafes, etc. The communities that surround allow the market property benefit with its revival.
Hungarian housing prices escalated 21%. This figure was recorded 2014 and the end of 2015 September. Prices of houses rose 15% per year by the third quarter of the previous year. These results are agreeable as the housing market recovers.
Hungarian central bank will embark on publishing every six months a record of the real estate market report. The significant increase in the housing prices leads to a mass of new housing loans. According to the National Bank of Hungary, the loans grew by 50%.
Does this mean that the price will continue to rise? The Central Bank considers the price increases to slow down gradually because of the emerging supply.
Various Government developments proposals.
These are some of the Central Banks Projections:
- A cut in Value-added Tax on new homes
The Tax is imperative, and the tax cut would take effect from 2016-2019. The tax cut will be for small units of 150 square meters and houses to 300 square meters. We know those permit requirements would be more simple because of the proposal.
- Family Subsidiaries
- Approximately 10,000 new homes built by the end of next year.
The government of Hungary has a proposal to boost the amount of new homes built in Hungary according to Hungary New site.
The National Bank of Hungary said last Monday they do not believe the price hike is excessive since the 2008 financial crisis. They also believe the risk level is not substantial.
It seems to be the central theme that there is a need to monitor the market developments regardless of the low risk perceived.
After the financial crisis from the past, the property market of Hungary reports being recuperating and recovering. The increase in housing prices from 2014 to 2015 has piqued the interest of the Central banks as they report the increases from each quarter.
According to Barnabas Virag (MNB managing director), he claims that the prices of houses are now at an average from the past year.
If you compare other rises from neighboring countries like Czech Republic, in Poland and Slovakia, Hungary had an important increase in demand. In comparison Central European countries, the increase is 10%. Hungary’s increase is 15%. The 15% is the highest rate compared to the European Union States.
Once Central banks monitor the markets what will keep the demand and supply steady? If more people can afford houses will there be enough supply? If there is sufficient supply to meet the request, will the economy grow?
The view is optimistic for Central banks and for the media who cover the topic. With this hopeful stance comes the discretion of Banks to assure that they monitor the market for the ups and downs of supply and demand. After all, we don’t just end with good news but a universal need in how to maintain these increases.
The market in Budapest for newly built homes strengthens. The housing loan rates continue to fall. Some creditors have been able to sell real estate non-performing free of restriction.
Everywhere you look, there is the constant highlighting of the real market boom. There is news that Hungary is getting back on track, and this is something to enjoy and even celebrate. The word recovery is always good as supposed to downfall.