Budapest, February 24 (MTI) – Analysts polled by MTI on Monday said the construction sector on the whole was improving on the back of large state investments, but home construction was still in a slump, with no turnabout expected in the short term.
The number of permits issued for new home builds fell 28.9 percent to 7,536 last year, according to fresh data from the Central Statistical Office (KSH). The permits were issued for a total area of 856,400 square metres, down 25.4 percent. The number of new home completions dropped 30.9 percent to 7,293 last year, KSH said.
Hungary’s housing construction market has contracted since around 2008. The number of home building permits issued last year was just 17.2 percent of the level in 2008.
The number of permits issued for non-residential buildings fell 13.2 percent to 5,330. Industrial buildings accounted for about 20 percent of the total. Farm buildings made up 29 percent and commercial buildings made up just 4 percent.
ING Bank chief analyst Andras Balatoni said household indebtedness was weighing on home construction. A fall in new home loans continues and it is unlikely that the home housing market will pick up any time soon, he said, adding however that Eurostat data show a growing proportion of Hungarian households plan to buy or build homes, which could have an impact on the market in the medium term.
Orsolya Nyeste, an analyst at Erste Bank, said the home construction market would not show a significant turnaround this year, but the contraction might slow. Lower interest rates would support a change in the trend, but much would depend on household incomes in the medium term, she added.