Koji, president of the National Federation of Hungarian Building Contractors (ÉVOSZ), discussed the market on Világgazdaság’s Négyzetméter property programme. The newspaper reported on 4 November that the budget could cover a new-build flat of 35–40 square metres in Budapest, as long as the buyer is not looking in the city centre or a premium neighbourhood.
The price of compromise
Buyers may need HUF 10–15 million of their own funds. Koji also said that meeting the financial requirements was considerably easier with two incomes.
For young people looking for their first home, that often means accepting less space and a location farther from the centre. Many new-build properties in Budapest cost more than HUF 100 million, while housing prices in Hungary have risen three-and-a-half-fold over the past 15 years.
Supply is also limited. Only 12,000 new homes were completed last year, and ÉVOSZ expects no more than 15,000–16,000 this year. Demand would be higher, but many prospective buyers cannot afford newly built properties at current prices.
Cheaper loans, limited supply
Under the Wekerle Plus programme, loans are available at 3 per cent interest for new-build homes and 5 per cent for existing properties. In Koji’s view, the two-percentage-point difference is unlikely to change buying patterns substantially on its own.
Previous experience shows that 92 per cent of the loans taken out were used to buy existing homes. This part of the market offers a much larger and more varied selection. Koji argued that supporting buyers would therefore not be enough without financing for property developers as well.
Construction itself is only one part of the cost of a new home. Land prices, utility development and other project expenses also push up the final price.
The industry could build more
Koji said Hungary’s construction sector had the capacity to complete as many as 25,000 new homes a year, with enough materials, designers and contractors available. Prefabricated building components could speed up construction and reduce costs at larger residential developments, although the method is primarily economical for high-volume projects.
Source: Világgazdaság
