New home building permits in Hungary down 2.1 pc in first quarter of 2019!

The number of home building permits issued in Hungary fell by 2.1 percent to 9,639 in the first quarter of 2019, data released by the Central Statistical Office (KSH) on Monday show.

The number of home building permits issued in Budapest fell by 9.4 percent to 3,656. The number issued in county seats and cities with over 50,000 residents decreased by 8.4 percent to 1,965. The number in other cities was down by 5.5 percent at 2,458, and the number in smaller communities jumped by 46.2 percent to 1,560.

Lawmakers lowered the VAT rate on home construction to 5 percent from 27 percent from 2016, but the rate is set to revert to the former level, which is Hungary’s main VAT rate, from the beginning of 2020. The preferential rate will still apply to homes that have a building permit on November 1, 2018. But these homes must be sold no later than December 31, 2023 for the exemption from the main VAT rate to apply.

Commenting on the data, Finance Minister Mihály Varga said

the state of the Hungarian economy and recent government measures would provide further momentum to the construction sector.

The minister said the sector’s output could increase by 20 percent this year.

The number of completed homes rose by 8 percent to 3,661 in the first quarter of the year, Varga said. He attributed the increase to the government’s recently expanded home-creation scheme, rising employment and household incomes, rising demand for loans and the lowered VAT rate on home construction.

Analyst Gergely Suppán of Takarékbank told MTI that the decline in the number of building permit issues already reflected the impact of the phasing out of the preferential VAT rate. He added, however, that the government’s family support measures could give new momentum to home construction. He said

the number of completed homes in 2019 and 2020 could exceed 10,000 in Budapest and 25,000 in the country.

Dávid Valkó of OTP Ingatlanpont noted that the number of new building permits increased by an annual 46 percent in smaller communities, which he attributed to the effect of recent government initiatives to boost the housing market in villages and to the impact of rising prices in urban areas.

Source: MTI