OTP Bank: Hungarian residential property market is at a turning point

The growth of the domestic housing sector was still sustained in the first half of the year, but there are clear signs of the turn of the cycle, OTP Ingatlanpont real estate brokerage said on Thursday to MTI.

Citing the data of the Hungarian Central Statistical Office, they said that between July and September, 4.5 thousand new homes were handed over, which is the best third-quarter result in the last 12 years, while in the first nine months of the year, 13,617 homes were handed over, 7.7 percent more than in the base period.

The year-on-year increase between January and September was 36 percent in municipalities, 22 percent in county towns and 7.7 percent in smaller towns, while in the capital the number of housing transfers shrank by 10 percent.

The divergence is partly explained by the Covid effect in smaller municipalities, with many people moving out of the big cities, while large investments in the capital may have been hit particularly hard by the recent difficulties, construction price rises, supply chains and labour shortages, the statement quotes Dávid Valkó, senior analyst at OTP Ingatlanpont. Another reason, the expert said, is that the metropolitan housing market, which usually reacts more quickly to changes in the housing market, is also experiencing an earlier slowdown.

The number of housing applications (building permits and simple notifications) rose by 15.8 percent to 25,984 between January and September, but here too there were significant differences by settlement type, the report shows.

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In the capital, the number of new applications increased by 99.3 percent from a low base compared to the same period last year, while in the cities with county status the increase was only 1 percent. Smaller towns and villages saw a decline of 7.3 percent and 2 percent respectively.

In Baranya County, the number of housing applications increased by 109 percent year-on-year, but in most counties, the number of housing applications has already fallen, with a 59 percent decrease in Tolna County, a 34.3 percent decrease in Hajdú-Bihar County and a 28 percent decrease in Bács-Kiskun County.

In the statement, Dávid Valkó pointed out that the current economic situation is not favourable for housing construction. The two-year extension of the 5 percent VAT on new homes could even lead to a drop in new applications in the fourth quarter, as many people may opt out of buying property in the current uncertain situation, he wrote.

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Source: MTI