What awaits the housing market in 2021? Portfolio.hu talked to Ádám Banai, a real estate expert of MNB (Hungarian National Bank), about what influences prices, risks, VAT on residential properties, and about the effects of the home renovation program.
One thing is for sure: the new programs will boost demand, and it is already evident that much more new projects will launch this year than in 2020. Considering the housing market, it offers hope that there is no decrease when it comes to loans, which will stay this way until these programs can uphold demand. There is, however, one aspect that can be problematic.
Can the construction sector keep up with all the private and public orders?
When portfolio.hu asked Banai whether prices will drop again, he said they were not expecting it, at least not to a great extent. Based on preliminary data, the second quarter of 2020 produced worse numbers, while at the same time, prices of residential properties did not drop that much. Looking at the future, we can already see that restrictive changes are definitely shaking up the market.
The first quarter of this year in the market is not motivated and moved by loans, its rate is relatively low, and loans are less risky and taken in the local currency, making the situation very different from that of 2008.
The whole of the market has changed in a way that instead of drastic changes in price, more significant bargains and prolonged sales periods characterise the Hungarian market.
Due to the complete lack of tourism in the past months, rental fees decreased significantly, but they are expected to rise back to their previous level.
Banai added that the physical quality of housing, more precisely that of properties, is in quite a bad condition. One-third of energy consumption comes from residential buildings, which, however, does not directly mean that it is caused by citizens wasting energy. Especially for this reason, the renovation support is crucial among all other types of financial help. Which then leads us to the biggest risk factor: how will the construction sector deal with all this? In previous years, we have seen the limits of their capacities, and now that renovations and the construction of new properties are kickstarting together at the same time, there is a chance we will face the same problem again. Considering our possibilities to increase the capacity of the sector is important for this reason. A much more predictable policy on housing that is easier to plan could solve all these issues of capacity.