Buying into the Budapest boom

The Irish Times

Irish buyers flocked to Hungary in the Celtic Tiger. Prices have now recovered

When the Irish began a short-lived love affair with overseas property from the end of the 1990s, the initial foray was into resort property along the Mediterranean. From there, horizons broadened to well-known and travelled capitals. As these were considered too expensive, the hunt for value began and one of the cities that most attracted investment was Hungary’s capital, Budapest. This pre-dated Hungarian EU accession in mid-2004.

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New home prices up 7.6% in first half

Budapest Business Journal

Average new home prices rose 7.6% in the first half of 2018 from a year earlier, while the price of resale homes increased 8.2%, according to a summary of data published by the Central Statistical Office (KSH), as reported by state news wire MTI Tuesday.

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Govʼt to extend preferential VAT for homes with valid building permits

Budapest Business Journal

The government will propose extending the preferential 5% VAT rate on home construction for properties holding a final building permit as of November 1, 2018, until December 31, 2023, Minister of Finance Mihály Varga was reported as saying by state news agency MTI.

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“Parliament votes to phase out subsidies on home savings bank deposits”

Budapest Business Journal

Az expected, Parliament voted on Tuesday to phase out state subsidies on deposits at home savings banks. The motion was passed in an expedited procedure with 125 votes for, 49 against, and no abstentions, state news agency MTI reported.

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“Strong demand and supply side frictions on the housing market”

MNB

Budapest, 11 May 2018 – In 2017, the domestic housing market picked up further in a favourable macroeconomic environment. House prices rose by 13.8 percent in nominal terms, and growth may continue in 2018. Housing transactions expanded by 2 percent last year. The strong, annually over 5 percent, dynamics in real disposable income, the favourable labour market trends and the dynamic, although healthier, expansion in lending for house purpose all supported the rise in market demand. However, considering the low ratio of loans to GDP, there is room for further growth in housing loans. On the supply side of the housing market, more frictions can be identified, hindering vigorous growth in housing construction. On the one hand, developers are struggling with planning, due to uncertainties related to the preferential VAT rate, while there is a shortage of skilled labour of almost 40,000 workers in the construction industry, which adds to the tightness of capacities. As a result, 63 percent of ongoing housing projects in the capital city are in delay, while developers do not plan any notable amount of new housing completions from 2020. As regards house prices, there has been no overheating yet; however, in the capital city prices have already reached a level justified by fundamentals, thus the housing market must be closely monitored further.

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“Budapestʼs central districts still most desirable to live in, says survey”

Budapest Business Journal:

As in 2016, Districts 1 and 5 of Budapest remain the most desirable to live in, according to the latest survey from real estate agency Otthon Centrum. Of major cities outside the capital, the survey finds that Eger, Veszprém and Tata lead the way.

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“Hungarian construction output continues to grow”

Budapest Business Journal:

Output of Hungaryʼs construction sector rose 26% year-on-year in February, the Central Statistical Office (KSH) said Friday. The output of the building segment rose 19.8% during the period, while the civil engineering segment climbed 40.1%.

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“IMF raises GDP growth forecasts for Hungary”

Budapest Business Journal:

The International Monetary Fund (IMF) raised its projection for Hungaryʼs GDP growth this year by 0.4 of a percentage point to 3.8% in its fresh World Economic Outlook published on Tuesday. The IMF projects growth slowing to 3% in 2019, although this projection, too, was raised by 0.2 of a percentage point.

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“No new homes in Budapest below HUF 20 mln”

Budapest Business Journal:

The continuous rise in real estate prices in Budapest is pushing buyers outside the capital city, where homes are somewhat more affordable. Small flats have also been in higher demand recently. According to quarterly data published by the Central Statistical Office (KSH), the composition of sold homes has shifted towards lower-value real estate, resulting in an only modest growth in the average price of used homes last year of 2.8% compared to 2016.

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“Scope affirms Hungary’s credit rating of BBB”

Budapest Business Journal:

Credit rating agency Scope has changed the outlook on Hungaryʼs BBB sovereign rating from "stable" to "positive." At the same time, Scope has affirmed Hungaryʼs BBB long-term and senior unsecured local and foreign currency ratings, along with the short-term issuer rating of S-2 in both local and foreign currency.

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“Housing price growth driven by scarcity of new homes”

Budapest Business Journal:

Prices on the Hungarian housing market continued to grow in the third quarter of 2017, both for new and resale homes. Growth was higher in the case of new homes, driven mainly by low construction rates in the preceding years, according to real estate listing site ingatlan.com.

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