The housing market – both the market of the new built and the owner occupied homes - in Hungary is well on the way to recovery from the recession. The new governmental allowance program – CSOK –, has also contributed to the growth. By the end of 2018 at least 15-20,000 new homes are foreseen to enter the Hungarian property market.
The new build market was more moderate than the owner-occupied market in 2016. ”There is a demand for new build properties as during the crisis and after that there were hardly any homes were built. However, it is important to keep in mind that the construction of new homes cannot be done overnight” – explained László Balogh property expert. He also added that it was encouraging to see that the number of building permits for new homes exceeded 21,000 in the first nine months of last year, which were 2.5 more than that number in 2015. As the supply of the new homes was low in 2015 too, it should be considered a significant increase. According to the real estate expert the CSOK did not have any significant impact on the price of the owner-occupied homes, whereas it helped the claimants to pay for the surplus – the consequence of the market price growth – more easily.
The year of new build homes
According to the data of one of the biggest Hungarian real estate site countrywide 40-60 pecent more new homes were advertised in 2016, but a real spectacular growth has yet to come in these two years. As results of constructions started in 2015 and 2016 and new investments having just started this year 15-21,000 new homes are estimated by the end of 2018. László Balogh also added that due to the waves of home constructions the proportion of the new build homes is expected to reduce in 2017 and 2018. CSOK will have a crucial role in the recovery of the new build market. Banks had accepted more than 24,000 CSOK applicants by the end of November 2016. Most applicants applied for support to purchase owner-occupied homes in 2016. In 2017 the situation may change due to the first wave of the new homes coming to the market, hence CSOK applicants applying for new home benefits may represent a higher proportion than applications for the owner-occupied homes.
The increase of supply may create competition
The price of new build homes grew further in 2016 due to the increased demand and moderate supply. At the moment it is hard to forecast the exact price of the new build homes since the increasing supply may create competition among the investors, which can also somehow put a brake on the price growth of the owner-occupied homes. There will be constructions – especially n Budapest – where the high level of demand provides opportunity for further price growth. Apart from the price competition there will be several devices for the investors to attract buyers such as flexible paying conditions, higher level of technical architecture, free kitchen furniture or garage at a favoured rate.