Budapest will run out of properties with reduced VAT rates by 2021
The number of real estates with reduced VAT rates (5%) is rapidly decreasing. There are less than 3,500 left in the capital, and they are likely to disappear from the market by next year. With the housing market in decline, developers are waiting for the rust zone map.
Rust zones are usually former industrial or economic areas that have been disused or underutilised, and these are usually in a deteriorating physical condition and affected by environmental problems such as pollution.
Properties with higher VAT rates do not sell very good. Their share on the market increased from 40% to 46%, while sales dropped from 41% to 31%, hvg and vg report. Such properties are sold only in the more expensive neighbourhoods.
Most real estate developers are waiting for the rust zone map to come out, hoping that they will have an area that will fall into the zone. However, the details of state aids for the recycling of abandoned industrial areas announced at the beginning of summer are still unknown.
The new housing market in Budapest is in bad shape. This is partly due to the restoration of the 27% VAT rate, the economic recession due to the epidemic, and the decreasing supply. In the spring of 2020, fewer than 300 new homes were launched on the market, and several construction sites have been shut down.
Real estate prices started to decrease at the end of last year. Now, due to the coronavirus epidemic, demand is falling quickly, and not only for new but also for second-hand flats. The Budapest real estate market, the prices of which have been skyrocketing in the past few years, reached a turning point.
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Source: www.hvg.hu; www.vg.hu
The theme of this article, has merit and importance in the immediate, short and long term picture, of the property market, but it – FAILS – to highlight, the over supply and availability of property for Sale in Budapest.
We know the ravaged and reshaped society we ALL are currently being forced to live in, through the arrival, of this devastating novel coronavirus.
Prior to February 2020 – opinions where varied in the property game, that we had a growing problem of the over supply of residential and commercial properties on or in the near future being listed for Sale or Rent, and the direction the markets, in fact where at this time heading – in either an UPWARD or DOWNWARD trend.
The scenery has drastically been changed, deteriorated, from March 2020, that places the property market in the precarious vulnerable position, that – Factorially – it finds it-self to-day.
Do the numbers.
There is no magic to doing the statistical numbers that clearly indicate we have, and continue to “feed” the alarming situation, of an over supply of residential and commercial properties for sale in Budapest.
This is compounded by the Factorial knowledge that overflows into the continuation of the building of Hotels, that the question to ask is simple – who is going to occupy/stay in them ?
Globally it is FACT – values on residential property have seen major downward trend in price adjustment.
Hungary, we do not escape nor have absorbers, that will stop nor control the adjustment on the downside that is and will continue in the property market.
Challenging times of extremities – in the real estate property profession, bought on by a novel coronavirus and property markets – residential and commercial being in an over supply position – unbalanced to demand and need.