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Real estate prices rise despite CSOK and tax reduction

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There’s a price rise to be expected on the real estate market in Hungary, which is indicated by the rise in the case of properties (flats and lots) that have already been put on sale – according to GKI Economic Research Co.

Out of the housing policies recently installed by the Hungarian government, the reduction of VAT (from 27% to 5%) seems to be benefitting the range of supplies, as it provides developers and investors with a larger financial margin.

Demands are only incited by the lower taxes if, as a consequence, buyers can calculate with significantly lower price rates, which seems highly unlikely – as reported by GKI, adding that the costs of self-built family homes can be successfully reduced by using the opportunity granted by tax reimbursements.

According to GKI, the new home allowance program (CSOK) probably leads to a moderate rise in demands, but experiences show that the amount of state benefits will be counterbalanced by the expected rise in prices. Which means that the process will mostly help the building and construction sector, not citizens themselves.

Those who plan to buy their new homes with the assistance of the allowance program will also emerge as sellers on the market, further expanding the supplies and contributing to lower prices (in case of previously inhabited estates). Increasing earnings, persistently low rates of interest and postponed purchases could make the balance of demand and supply possible, which could lead to a long-term rise in prices in that sector as well, but considerably smaller than that of new estates.

However, structural problems and hardships could persist – it will be still difficult to break out from smaller settlements and economically underdeveloped areas, thus the fluctuation of prices will stay very differentiated, according to the economic research company.

The governmental measures will make a positive impact on the building industry, which will also contribute to economic growth – on the other hand, this stimulation is realised with a considerably expensive implementation, which results in severe liabilities budget-wise – as shown by GKI’s analysis.   

Home construction is still regulated by state decisions and not by the movements of the market, which results in a swing in the building industry cycle; a much larger one compared to the rest of the economy, bearing several negative effects – elaborated GKI. The company added that the government still refrains from trying to alleviate the housing difficulties Hungarian citizens have to face; still favouring that residents should live in their legally owned homes, which is not a viable solution for a vast part of the society.

 

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Demand for New Apartments Spikes in Hungary

Real Estate Prices Shoot up in Budapest 

What is the Scope of the Millions Gained by the New Government Support Family Benefit (CSOK) Program?

 

 

(Source: Hungarian Telegraphic Office via http://www.vg.hu/vallalatok/ingatlan/hiaba-a-csok-es-az-afacsokkentes-meg-dragabbak-lehetnek-a-lakasok-464133)

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