Hungary’s housing market is in danger
A new trend indicates a fallback in the construction sector. Without government intervention, it is feared that the construction market might be halved in the near future. If this trend continues the housing market might implode. There are already signs which indicate a grim outlook. Dismissals are already happening and there is a shortage of construction materials.
In the next two years, it is expected that job opportunities in the construction sector will become rarer. Since September, construction orders have been decreasing. This is mostly attributed to the cutback on state-financed projects. Hungary suspends 284 investments in total, which means about HUF 2,100 billion (EUR 5 billion) in value. This suspension is temporary and the government plans to resume them in 2025 or 2026 — reports 24.hu. All this is necessary to reserve state money in light of the crisis.
What does this all mean?
The state is a very important actor in the construction sector. Without its orders or payments, entire chains of debt can form, which is bad news for everybody involved in the sector. As a result, the volume of construction production shrank by 4.4 percent since July. There are 50.4 percent fewer new contracts compared to last year already and the total volume of the sector has decreased by 7.8 percent since last year.
Due to the shrinking market dismissals will become increasingly widespread. In the following years, there will be 15 percent fewer job opportunities in the construction sector. However, in other niches, this rate can be even higher at around 20 percent. As manpower makes up about 50 percent of the total costs in the sector, this is where the reductions will be seen first. Because of this unskilled labour will be less needed primarily.
The usual factors of the economic crisis apply here too. As transportation, energy and labour costs increase, the less profitable the sector will become. Furthermore, the price of construction materials also rose by 23 percent, which cannot be diverted to the customers. These hurdles impact small businesses the most.
No new accommodations
Alongside the decrease in government orders, private customers are also abstaining from investing. Due to the price increases, most investors are waiting for better conditions. The value of most people’s reserves also decreased due to rising inflation, therefore loans would be needed. However, with two-digit interest rates, most people will not take on this risk.
Last year there were about 22,000 new houses constructed and about 250,000 were renovated. By the end of this year, approximately the numbers are expected. But next year these numbers can be halved.
Read alsoJapanese business federation leader has been awarded the Order of Merit of Hungary
Source: 24.hu
please make a donation here
Hot news
The big showdown: Is life better in Romania than Hungary?
Hungarian researchers’ new methodology for replacing GDP: the sustainability turnaround
Russia’s vision for Ukraine in 2045 might include Hungary – What’s the endgame for Moscow?
Orbán cabinet announced considerable wage rise in this sector
Disturbing VIDEO emerged of the murdered American woman’s last hours: she walked hand in hand with her alleged killer
Dozens of Budapest technological university BME researchers on the Stanford list
1 Comment
The “ifs or buts” – but the market remains as it has, for post February 2020 – over supplied.
It has moved from being over supplied in particular the last 16 months, to being in a SELLERS saturated trend.
The factors – multiple reasons, just nor arising from within Hungary, its “failing” economy nor the entire European Economy, but Global, that continue to throw doubt, what way at this point in time the World is heading.
The World was changed commencement post February 2020, and it continues – in this FLIPPANT un-certain, pattern, that continues to give all indication, we are still distanced, from finding a pattern(s) – to return Financial, Commodity & Currency Markets, the Economies of Countries, back to a position of Stability.
Sadly, the Hungarian “ifs or buts” – the Economy, weakening, no signs of STABILITY, we will witness – on-going CARNAGE in the over supplied SELLERS market, in the Real Estate – Property Markets.